The Australian dollar remains weak after falling last Friday. Looking at trading this morning, the currency is flat against most global peers. Last Friday, a statement by the Reserve Bank of Australia suggested that inflation was likely to remain weak. The currency weakened following the report as interest rate hike expectations fell. Looking at the Chinese yuan, the currency has been weak in the last few days, which is also weighing on the Aussie. We have previously noted that the fortunes of the Australian dollar are highly correlated with the Chinese yuan, given that China is Australia's largest trading partner. Our medium-term outlook on the currency remains bearish.
AUD/USD is currently trading just above 0.7640. Looking at EUR/AUD, the pair is currently just above 1.5210. The GBP/AUD exchange rate is currently above 1.710.
This week’s economic data contains consumer confidence, employment and consumer inflation expectations. On Tuesday, we’ll see Westpac Consumer Confidence. Later on Thursday, we’ll get employment changes and the unemployment rate. Last week, the RBA maintained its cash rate (1.5%) while suggesting a weak outlook for inflation.