AUD/USD breaks higher as Brexit relief rally extends

AUD/USD has gunned through resistance at 0.7450, printing its highest level since June 27 at 0.7470. The Aussie has been favoured by the recovery in risk appetite, with the S&P 500 up by 1.3% and Oil also shaprly higher.

Brexit, Australia's election main drivers

Valeria Bednarik, Chief Analyst at FXStreet, notes: "Market realized that the direct effects of a Brexit on the Australian economy are likely to be reduced, as the commercial relationship between both countries is quite small."

One key developments to watch for this weekend is Australia's double-dissolution election (both houses will be turned over). The team at TDS Research, notes: “The Turnbull Govt has pulled ahead in the polls, campaigning on "stability" post Brexit.  Another 3yr term of a conservative Coalition government victory is more market-friendly than opposition Labour, given the latter is campaigning on borrowing and spending billions on "health and education" (which are supposed to be state issues but have blurred in recent years).

AUD/USD outlook

From a technical point of view, Valeria wrote in her US close report:  "The downward scope according to the 4 hours chart is now limited, as the technical indicators have turned modestly lower, but remain within neutral territory, whilst the price is above the 20 SMA and 200 EMA, both around 0.7380/0.7400. A break below this region, should confirm a downward extension towards 0.7330 for this Thursday.