AUD Surges to Seven-Week High on Foreign Flows

The Australian Dollar has reached a seven-week high of just above $0.7050 after a gain of nearly two tenths of a percent, its best level in seven weeks and the first time since mid-June that price has held clear of the 50-day Exponential Moving Average (EMA) near $0.7000.

The 200-day EMA near $0.6900 continues to rise underneath, and the structure now reads as a base rather than a downtrend. However, the way the move has been built is problematic - today's range covers only 25 pips, the daily Stochastic Relative Strength Index (Stoch RSI) has rolled over from the high eighties to the mid seventies, and the entire advance has come in a week when Australia's own interest rate case was dismantled.

The Australian Dollar's rally has nothing to do with its fundamentals. The hike that got priced out was three increases in February, March, and May that took the cash rate from 3.60% to 4.35%, and the June hold explicitly kept a fourth on the table.