The Australian Dollar traveled viciously upward as fears of a resurgence in commodity prices took hold over investor sentiment. However, since Mar. 2nd, the currency has oscillated against it's U.S. counterpart in what appears to be a descending triangle. During this period, the market had been reluctant to continue on a directional path in light of the Reserve Bank of Australia policy rate announcement yesterday. Nonetheless, the pattern exhibited is one of continuation that may signal that the pair may continue to rise.
Yesterday's announcement showed that the bank may likely stop its interest rate cutting campaign. Such a shift in the policy objective would theoretically keep the yield attractiveness of the country in positive territory and thus prop the currency.
Despite this fundamental stance, equities could bring this pair to its knees. For about the last month, we have seen commodities rally on good news from the stock markets. Such moves have hence given the Aussie some lift. But at the time of this publication, U.S. equity futures are suggesting that a heavy selling-spree will take place during tomorrow's trading. In fact, the June contract on the Dow is down 1.1%. Australian stock futures are down 2.62%. So, even though the fundamentals may point towards some upside here, intermediate stock fluctuations could force the currency downward.
