Carry return, RBA influence may push AUD/USD near 0.6800
Aug 8 (Reuters) -AUD/USD struck a 10-session high Thursday after erasing earlier losses and rallying above the 10-DMA. With this, investors may be leaning toward a test near 0.6800 if the carry trade, RBA and tech influences persist.
Some concerns the carry trade would unwind eased after Bank of Japan Deputy Governor Uchida played down the chance for near-term hikes.
U.S. claims data also eased concerns the carry trade would vanish as fewer jobless claims than expected rallied Treasury yields US2YT=RR as worries for slower job growth and Fed cuts were reduced.
These factors helped rally the yen crosses. AUD/JPY rallied and threatened to break key resistance near 97.00. The rally helped AUD/USD reach its 10-session high.
RBA Governor Bullock reinforced the case for AUD/USD gains when she said the central bank will not hesitate to hike rates in order to control inflation.
Technicals highlight also upside potential for AUD/USD.
Rising daily and monthly RSIs imply upward momentum is in place, and a bull hammer candle is forming on the monthly charts, which suggests bears are losing their grip.
Additionally, a head and shoulders bottom is forming on daily chart with the neckline near 0.6575/80, which, if broken, suggests a move toward 0.6800 is possible.
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(Christopher Romano is a Reuters market analyst. The views expressed are his own)
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