The AUD USD rose sharply overnight, negating Monday’s closing price reversal top on prospects global growth will boost demand for commodities. Trader sentiment has rapidly shifted toward risk as the markets appear to have absorbed the potentially bearish situations in Japan and the Middle East.
The rally to 1.0332 took the Aussie to its highest level since it was freely floated in 1983. The quick turnaround the past two days has helped form a new minor bottom at 1.0204. A trade through this level will likely trigger stops and encourage position lightening, however, upside momentum appears to be strong enough to make this price level a non-issue at this time.
With inflation and commodity demand the talk at this time, expectations are for demand for the Australian Dollar to remain steady. Also driving this currency higher is the improving outlook for China. Analysts are calling for China’s Purchasing Managers’ Index to show a rise from 52.2 in February to 54.0 in March. Commodity exports play a major role in Australian economic growth.