The Australian dollar continues to rise sharply, following good economic data and weakness in the US dollar and the euro. As the currency has now broken its short-term bearish trend, we will upgrade our outlook to neutral later today. Over the medium-term, the Australian dollar remains in a bearish trend. Looking at Chinese financial markets, while 10-year government bond yields have been hovering below 4%, the Shanghai Composite has been selling off fairly sharply. Recent instability in Chinese currency, bond and stock markets has resulted in AUD weakness since late October.
AUD/USD is currently up and trading just above 0.7690. Looking at EUR/AUD, the pair is down and currently just above 1.5320. The GBP/AUD exchange rate is down and currently above 1.7460.
This is a pretty light week for economic data and events relating to the Australian dollar. Business conditions came in at 12 (vs. 21 prior) while confidence fell to 6 (vs. 8 prior). Quarter-over-quarter house prices fell by 0.2% (vs. 0.5% expected). Westpac consumer confidence was higher than the previous print (3.6% vs -1.7% prior). RBA Governor Philip Lowe's speech did not have a significant impact on the currency. On Thursday employment changes (61.6k vs. 18k expected) and the participation rate (65.5% vs. 65.1% expected) were better than estimates. The unemployment rate (5.4%) met expectations. Last week, GDP growth missed expectations on consumer weakness.