The Aussie remains stuck between recent ranges
We are taking a bullish stance on this pair and are looking forward to buy daily call options for a close above 0.89. Despite a weak start to trading after the NYE the Australian dollar has overextended to the downside in our view.
Buying daily calls when the price drops to 0.8900 is our preferred strategy, however we will also buy a sustained break above 0.8950. The negative news for the Australian currency have been largely priced in by the market.
The session today started with a negative tone, as on the 1st of January the Chinese government has released Manufacturing PMI data that was far from rosy. In fact the reading came out at a 4 month low for December and the close trading partner's currency that Australia is has reacted with a lower open.
Prices have gaped to 0.8890 from Tuesday's close around 0.8927 and awaited confirmation from the HSBC's bank survey on Chinese manufacturing. That disappointed too and the rally to 0.8925 has lost its ground all over again.
Selling was the theme during the European trading session with all risk assets losing heavily during the first trading day of the year. Stocks have dropped across the board and the Japanese Yen has rallied for the first time in many days.
Into the afternoon as US trading kicked in the Australian dollar reversed course and managed to stage an impressive rally by one full cent from 0.8842 all the way up just above 0.8944 just before the London 4PM fix.
We are looking at the charts and are maintaining a view that this strong rally signifies further gains for the AUD/USD binary options forex pair. However in order to be cautious we are waiting either for a pullback to 0.8900, or a rally above 0.8950.
The strength that we view is based on recent rally in metals prices that Australia is producing and the view that most negative news for the currency have been priced in as of right now.