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Australian dollar mostly higher on improving risk sentiment

Australian dollar daily update

BY DEB SHAW | 

Australian dollar daily update

The Australian dollar is mostly higher today. The Aussie is strengthening against all major currencies except the US dollar. Yesterday, the Australian dollar traded in a similar fashion, and ended the day flat against the US dollar. 

With limited news from Australia, the major developments driving AUD include Italy's new anti-establishment government and the rising US dollar. Both factors have weighed on risk sentiment in recent history, which is negative for the Australian dollar. Following a significant sell-off, the currency is currently enjoying some relief. Today is a fairly neutral day for the currency as most equity markets and commodities are currently mixed. Looking at Chinese financial markets that tend to influence the Australian dollar, Hong Kong's Hang Seng Index is down while the Shanghai Composite is up. Copper is down, while iron ore prices are mostly unchanged. 

While AUD/USD has traded in a narrow range this month, we expect further losses in the Australian dollar over time. Our short-term outlook and medium-term outlook on the Australian dollar remains bearish. 

AUD/USD is up and trading just above 0.750. EUR/AUD is down slightly and trading above 1.5680. GBP/AUD is down and trading above 1.7950.

In this week’s Australian dollar economic calendar, we’ll see employment data. RBA Assistant Governor Debelle did not address the Australian dollar in his speech, while the RBA’s latest meeting minutes suggested a continuation of the status quo. The YoY Q1 wage price index (2.1%) met expectations, although quarterly figures were lower than expectations. Employment changes for April (22.6k vs. 20k expected) were above expectations, while the unemployment rate (5.6% vs. 5.5% expected) was slightly worse than expectations. Last week, March retail sales missed expectations by a wide margin.

Updated 
Outlook
Bearish

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