AUD/USD: Greenback Gives in to Aussie on King’s Day

The US dollar is keen to give in to a bullish start to the trades of its Australian counterpart’s weekly exchanges. Though price action initially dropped to a low of 1.0491, prices have swung back up with help from favorable risk sentiment as shown in the Australian equities market. Markets are closed in the United States today in lieu of Martin Luther King day, not to mention an inaugural address by the US president.

In the US, President Barack Obama took the oath of office yesterday to formally start his second term, which is arguably believed to carry over many of the same battles from his first term. Obama was officially sworn in by US Chief Justice John Roberts at 11:55 a.m. during a brief ceremony in the White House. He is scheduled to take the oath again today outside the US Capitol and deliver his inaugural address to thousands of people spread across the National Mall in Washington. Volatility can be expected from the currency pair, especially with respect to how Obama would touch on the debt ceiling debacle in his speech, if indeed he would.

Meanwhile, Australian shares inched higher to hit a 20-month closing high in quiet trading. A report that a Spanish bank is interested in the National Australia Bank’s British business helped buoy gains. According to a Reuters report, the S&P/ASX 200 index finished the day 6.3 points higher at 4,777.5, building on a 1.3 percent climb last week for its biggest weekly gain in seven weeks. Trade was subdued with Wall Street scheduled to be closed later in the day for a holiday.

National Australia Bank climbed 1.9 percent to A$26.85, a three-month high, after the Sunday Times reported that Spain’s Banco Santander is considering a $3.2 Billion bid for its UK assets. NAB scrapped plans to sell 337 Clydesdale and Yorkshire bank branches last April, having struggled to attract a buyer, and instead announced plans to shrink the business, cutting 1,400 jobs.

Buoyed mostly by confidence in the markets, a buy position is suggested for the AUDUSD to start the week. Still, be cautious of probable technical corrections in today’s trades.

Aviv N. Shapiro is a Senior Research Analyst and Business Development Officer for AlgosysFx.