- The Aussie dollar has rallied a bit during the trading session on Friday against the Swiss franc as we continue to see the Swiss franc used as a funding currency.
- With the recent interest rate cut coming out of the Swiss National Bank, it makes sense that the Swiss franc continues to suffer at the hands of other higher yielding currencies.
Now that we are well above the 0.60 level in the AUD/CHF currency pair it suggests that we are going to go much higher. In fact, this is one of my favorite longs at the moment, but I also recognize that you need to be cautious with your position size if you are just entering. It can also be backed up by the idea of GBP/CHF, EUR/CHF, and other franc denominated pairs are all starting to look the same.
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The 0.60 level should now be a significant amount of support. And it's probably worth noting that this is a market that continues to get you paid at the end of every day with the positive swap. That's not to say that this will be the easiest trade to ride higher, but it is clear that the market favors the Aussie and I think that will continue to be the case going forward. In general, I don't necessarily even have a longer term target, but I do recognize that we have a scenario where longer term traders are just hanging on to this investment.
The 50 Day EMA as Support
The 50-day EMA is near the 0.5950 level, and it looks as if it is going to head to the 0.60 level, further solidifying that potential support in general. I think this is a situation where you continue to see some of the lower yielding currencies around the world get hammered due to the fact that it is such a massive and wide difference between some currencies. Now it gives carry traders an opportunity to take advantage of it.
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