Record Australian trade data gives boost to Aussie Dollar

Australia reported a trade surplus of AUD 3.51 billion in December 2016, 72% increase from an upwardly revised AUD 2.04 billion surplus in November vs. market expectations of a AUD 2.20 billion surplus. It was the second straight month of surplus and the largest on record, as exports rose much more than imports. Further details can be found at: Australia Trade Data 2017.

As an expected reaction, the Aussie Dollar spiked post the record data, keeping its bullish stance from January '17. Quite some interesting stuff happening on the daily chart here: firstly an inverse head and shoulder pattern completes and breaks-out the neck line / uptrend slope. Within this a cup and handle formation can be seen too. On the moving average front, a cross-over in the 50-EMA and 50-SMA indicates a potential continuation of the trend upwards. See the yellow circles for previous behavior of the $AUDUSD on daily chart.

Trend north could face some resistance at 0.7679 level and a break-out here could take the currency pair to 2017 highs of 0.7780 before making further records. Should the trend reverse for any reason, resistance will be seen at 0.7503 (bottom of the Q4 '16 range traversal) and then at 0.7311, before the pair plummets to yearly lows below 0.7200 key level.

Overall strong fundamentals driven by strong data (political seen to be explored), yesterday's U.S. FED meeting outcome (no change to interest rate added with not-so-much a hawkish tone indicating no rate cuts in Federal Reserve's March meeting) keeps the Aussie (as we discuss AUDUSD here) heads high for now.