AUD: technical indicators are poor - BBH

The Australian dollar ends its seven-week with aplomb as it lost more than 2% against the dollar for its biggest weekly fall since mid-November, notes the research team at BBH. 

Key Quotes

“We had seen the Aussie as among the most vulnerable to a turn in the US dollar, and often see it leading the other major currencies.  It had broken down even before the US jobs data, which pushed it lower still, and the other majors joined the move.  The Aussie has lost its interest rate support.  First, it was the US two-year yield that rose above its Australian counterpart.  Then it was the five-year, and before the weekend, the US 10-year yield traded above Australia's 10-year yield.  Weaker metals prices and the general risk-off move did the Aussie no favors.”

“The Aussie's technical indicators are poor.  The correction to the move that began in the middle of last December is well underway.  That move began near $0.7500 and finished on January 26 around $0.8135.  The 38.2% retracement of that rally is found a little below $0.7900.  The low before the weekend was about $0.7920.  The technical indicators favor additional weakness.  The 50% retracement is found near $0.7820.  Bounces should be capped in front of $0.8000.”