The big forex trading news this week is the RBA rate hike. Although only 25bps, from 3.0% previous to 3.25% current, it’s the first amongst the G-20 nations since the global financial crisis began and Governor Stevens didn’t hesitate to mention more can be safely expected.

AUD/USD jumped on the news, rallying almost 140 pips in the day to set a new 2009 high at 0.8918. On technical analysis, a regression channel drawn from 14 July on daily charts puts the current trend in the channel’s midst with plenty of room to move higher. The price action is well above its MA-200. And a Fibonacci retracement, drawn from 13 July’s low of 0.7700 to 4 August’s reaction high of 0.8469 shows the pullback to the 38.2% line, with the full retracement retesting the naught point repeatedly until finally breaking through on 4 September, presumably on the better-than-expected U.S. jobs report released that date.

Tightening the candles and turning the Fibonacci around, as shown below, reveals the current price action, indicated by the lower magenta line, is just beneath the 161.8% extension of 0.8945. Above are four major resistance levels, marked by yellow lines, at 0.9104, 0.9318, 0.9505, and 0.9656. Just above the last, the 261.8% extension is at 0.9715, closing in on parity and only a brief run beneath the 2008 high of 0.9848, shown by the upper magenta line:

Fundamentally speaking, the RBA’s hike widens the interest rate differential between AUD and USD, putting further downward pressure on USD as a carry trade funding currency. The rumours of global reserve diversification, away from USD and toward EUR, the commodity dollars, and emerging market currencies, have been denied for now. However, that trend seems inevitable in the long run as that’s part of the global rebalancing currently under discussion by the G-20. Granted, as usual their statement has no teeth.

All in all, it seems as if another round of deep USD weakness (think the first half of 2008) may be under way. Unless the global financial crisis again rips the heart from the forex trading market, arousing risk aversion, there seems little to stop the commodity dollars of AUD, NZD, and CAD from gaining against the beleaguered USD.

Another run at parity is certainly possible. However, this goal is more likely to be achieved by CHF or CAD, or at least sooner. But with demand for gold stronger than demand for crude oil, AUD has every chance of catching up.

The possible fly in the forecast remains China and its demand for commodities. Much of Australia’s current growth trend has been spurred by that seemingly insatiable maw. However, indications are that the commodity stockpiling which has been underway may be topping out, as China’s exports, particularly to the U.S., have not rebounded as strongly.

Event risks for the remainder of the week include:

Australia’s September employment data, scheduled for release Thursday, 8 October, 00:30 AM GMT (11:30 AM Canberra time). Markets expect 10K jobs to be lost and for the unemployment rate to rise to 6.0%.

U.S. initial jobless claims for the week ending 3 October, scheduled for release Thursday, 12:30 PM GMT (11:30 PM Canberra time). Markets hope for the downtrend to resume, with a print of 541K.