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Australian dollar daily update for 2nd January 2018


The Australian dollar is rallying sharply today (especially against the US dollar), and is also strengthening against the euro, the British pound and the yen. The main driver of today's rally is general US dollar weakness, which is strengthening commodity prices and commodity currencies such as the Australian dollar. Looking at the Chinese yuan, USD/CNH is trading below 6.50 currently. The last time the Chinese yuan was this strong was back in September 2017 (when the US dollar made a long-term bottom). Based on various technical indicators, the Australian dollar is at bullish extremes on a daily chart. This is particularly the case for AUD/USD and AUD/JPY. Our short-term outlook remains neutral. 

AUD/USD is currently up and trading just above 0.7840. EUR/AUD is currently down and trading above 1.5360. GBP/AUD is mostly flat and trading above 1.7280. 

This is a very light week for economic data relating to the Australian dollar. On Wednesday, we'll get HIA new home sales. On Thursday, we'll see the AiG services index. On Friday, we'll see exports, imports and the overall trade balance. Prior to the holidays, the RBA's minutes suggested a positive economic outlook, while noting weakness in consumer spending.  


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