A pronounced Aussie turnaround

  

Fundamental analysis indications for the Australian dollar (AUD) are quite positive at present. Probably the greatest of these is the comprehensive victory scored by the conservative Liberal / National Coalition in the recent federal elections, which provides the most stable political situation in Oz for some years and places in power a grouping that is perceived to be pro-business. Their control of policy has been further enhanced by gaining dominance in the Australian senate in recent days.

There has been a rapid readjustment of the Australian economy, where lowered interest rates have expedited the growth of the non-mining sector. This is necessary to compensate for the decline in Iron Ore and other hard commodity production in the face of a slackening in demand, most notably from China. Already, mining companies have slashed their costs, even to the extent of introducing driverless goods trains to carry ore, to displace what had been the most highly paid train drivers on the planet.

The curtailment of a series of interest rate reductions by the Reserve Bank of Australia (RBA) at its last meeting indicates that the powers-that-be might be happy with progress on the re-alignment of the economy.

In the US, the announcement of the appointment of Janet Yellen as leader of the Federal Reserve will also serve to raise the AUDUSD pair, as her elevation is widely interpreted as placing the tapering of US Quantitative Easing on the back burner, at least to some extent.

There is one item that could upset the apple cart that is the current rise in the Aussie. Early on Thursday, Australian time, which is in the middle of the night tonight for those of us on or near Greenwich Mean Time (GMT), the Australian employment figures will be released by the Bureau of Statistics. A poor figure here, showing a rise in unemployment, will damage the current upward tendency of the Australian dollar.

Technically, there is clear resistance at 0.9640. Good jobs figures could help the pair to clear that and then, barring fundamental surprises, there is only parity with the US unit and the 200 period Simple Moving Average (SMA) to check the rise further: