The last time AUD was at present levels was September 22 2008, the Monday after the Lehman collapse when the world was worried about the cost to the US of the financial meltdown (a month later it was at $0.60 as it became clear that the cost would spread far beyond the US…)
Traders looking to get on board the rally should look for a dip back to the 0.8470/80 support zone. Such a move seems inevitable as a chunk of the Friday afternoon buyers of the breakout could get cold feet heading into a long holiday weekend in the US.
One of the underpinnings of the AUD rally has been the supposition that the RBA will hike rates no later than November. I wonder if they will be willing to hike rates with a strong and rising currency at a time when Australia is struggling with a wide current account gap. My guess is they will be less likely, the higher the currency rallies. When the market comes to that opinion, the best for the AUD will be over. it won’t happen right away, but is something to file away for the weeks and months ahead.