Aussie Dollar Surging: My Take on the Bullish Rally

Sept 12 (Reuters) - The Aussie dollar's hitting a 10-month high against the greenback and heading for its best week since April, and I'm honestly not surprised. With the US pumping out soft data left and right, traders are betting hard on multiple Fed rate cuts, while the technical signals for AUD are screaming "buy me now!"

I've been watching the Aussie tear it up across the board - reaching a seven-month high against the yen, a three-month top against the euro, and absolutely crushing the Canadian dollar at a 10-month peak.

Why am I so bullish? It's not just one thing. Record stock prices are helping, sure, but the yield differentials are where the real story is. The RBA isn't rushing into rate cuts like everyone else, commodity prices are climbing, and Australia's political landscape isn't the dumpster fire we're seeing elsewhere. Their debt position actually makes sense!

Chris Weston at Pepperstone put it perfectly: "This is more than just tailwinds from risk markets." I've noticed the same thing - my trading buddies are piling into AUD positions for both tactical and momentum reasons. The outperformance is just too obvious to ignore.

Against the USD, we hit $0.6665 on Friday after jumping 0.7% overnight and smashing through the $0.6625 resistance. That's given us serious technical momentum - I'm betting we'll test that November high of $0.6687 next.

For the week, AUD is up 1.6%, crushing most other G10 currencies.

Last night's US CPI reading and that unexpected jump in jobless claims have traders convinced the Fed will cut rates at least twice more after next week's guaranteed quarter-point slash.

Meanwhile, the RBA looks like it's sitting tight - solid domestic data means September cuts are off the table. Even November isn't certain anymore, with odds of a quarter-point cut to 3.35% dropping to 76%, down from 100% just weeks ago.

This divergence explains why Australian bonds haven't rallied like US ones, widening the 10-year yield spread to around 18 basis points from -20 back in June.

The kiwi dollar isn't having quite the same party, held back by weak economic data and their dovish central bank. It's holding at $0.5975 after gaining 0.6% overnight - up 1.3% for the week, but nothing like the Aussie's performance.

Everyone's watching New Zealand's GDP numbers next Wednesday, which will probably show a 0.3% contraction in Q2. Any worse than expected and the RBNZ might go for a massive 50 bps cut, though they've already signaled two more 25 bps cuts this year.

Today's retail data showed spending up 0.7% in August - the third straight monthly increase - so maybe Q3 won't be a total disaster after the expected Q2 disappointment.