The Australian dollar has hit a 27-year high against the British pound, rising to almost 68 pence. This is following a record high against the euro of 81.8 euro cents earlier in the week, and the Aussie reaching its highest level against the greenback in three months at USD1.0450.
Forex currency analysis is torn - on one side of the fence economists have argued that this is a sign of the strength of the Australian economy. While the jobless rate in Britain remains at 8.3%, and the rate in the US is 9.1%, Australia's unemployment rate has held steadily to 5%. While Europe enters another recession and the US economy remains on shaky ground, with talks of another round of quantitative easing, Australia's mining industry is soaring on the back of Chinese demand and a strong local currency.
However, on the other side of the fence economists point to the rising cost of living, and the struggle of local industries competing with cheap imports and online retailers. Australia will also be incredibly vulnerable should commodity prices deteriorate or the housing market bust.
Technically, the Aussie dollar broke its downtrend from 2011's high of 1.1075 against the US dollar with last night's spike; however it struggled to remain above the trendline and has since fallen back below 1.04. The Aussie is also struggling to break and hold above the uptrend it has held since 2009.
So, what lies ahead for the Aussie?
If this latest rally has shown us anything, it's that the Australian dollar is behaving the way it always has - climbing when the market feels optimistic and falling when pessimism rises. The January 17 rally was triggered by Chinese GDP data, which overcame market estimates and also resulted in broad commodity gains, and German investor confidence, which was also more positive than expected.
And, as soon as concerns about Europe resurfaced, the dollar started to fall.
That being said, the dollar does appear to be less vulnerable than it used to be, and has consistently remained above parity for over a year, despite extreme market volatility in the months of August and September 2011.
If price action breaks the 20 day moving average at 1.0242 we may see a deeper move, whilst if the Aussie manages to hold above 1.0430 there may be more room to rise.
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