AUD vulnerable as rally stalls despite positive cues
Oct 1 (Reuters) -The Australian dollar's inability to build on its gainsdespite several positive factors, its waning upside momentum after a near 5% rise from last month'slow and strong overhead technical resistance are clear signsthat a pullback is due.
The AUD, viewed as a more liquid China-relatedmarket play, has only gained 1.3%since last Tuesday when China launched aslew of policy measures to kick-start its economy.
Chinesestock markets have soared since then with the blue-chip CSI300 Index rallying 25% and the offshore yuan gaining 1.3%. The price of iron ore,one of Australia's main commodity exports, surged 9.76% Monday to a three-month high and Australian mining stocks have jumped15%. But the effect on the AUD has been relatively muted.
The Reserve Bank of Australia's reiteration of its higher-for-longer rate stance last week, which diverges from othermajor central banks barring the Bank of Japan, should also have spurred stronger gains for the AUD.
Tuesday's above-forecast Australianretail sales and modest rise in Septemberhome prices have failed to lift the AUD, even as they reinforce the RBA's hawkish stance.
AUD/USDfaces strong resistance at 0.6949-62where the 76.4%of the January-October 2023 decline and 55-monthmoving average converge, followed by psychological resistance at 0.7000. A corrective decline to supports at 0.6820 and 0.6780 looks likely.
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Krishna Kumar is a Reuters market analyst. The views expressed are his own. Editing by Sonali Desai
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