Aussie pushed a swing up to reach our target around $0.7633, as projected in our March 14 article, and made another swing up to as high as $0.7720 level on March 31, after testing the support at around $0.7480 handle on March 24. This made counting the Elliottwave a bit tricky, as wave 4 usually comes down to 38.2% of wave 3, which in this case means we could still possibly be at wave 3 if not wave 5.
Charts aside, looking at the fundamentals, we believe Aussie's recent rise is largely due to dollar weakness in response to the confusing Fed statement about the US rate hike. Australia's February trade balance and retail sales figures didn't paint a beautiful picture last week, as trade deficit grow from A$3.16 bilion to A$3.41 bilion, and retailers recorded zero growth in February sales. However, RBA decided to hold its rate at 2% as expected, hence buoying demand.
This week, Chinese trade data, from Australia's largest trading partner, does not look good either, with trade surplus expected to decline and GDP contracted by 0.1% to 6.7%. On top of that, Australia's unemployment rate is expected to rise from 5.8% to 5.9%.
Nevertheless, looking at the futures market, speculators increased their net long by 4.11% in the recent CoT reports for June delivery, potentially spelling out for a last push to the upside before market tests the breakout area.
On the institutional side, we saw Morgan Stanley place a limit order to sell at $0.7800 level targeting $0.6900 level. Of the 30 institutions surveyed, all called for a lower Aussie than what it is now, around $0.7570 as of this writing, with Morgan Stanley being the most bearish, predicting $0.67 in a month time.
HalalTraders look forward to deploying our range strategy before rejoining the bulls around the breakout area to ride the uptrend.