The Australian dollar is currently steady against all major currencies, except the British pound and the Japanese yen. Both the pound and the yen are down against all major currencies today. Yesterday, the Australian dollar continued to make gains versus its US counterpart. Notably, trading volumes in Australian dollar futures have decelerated for the past three sessions - a sign that traders are not buying the rebound with as much conviction. Today's AUD/USD trading range is 0.7040 - 0.7320.
There are no significant domestic developments today. Instead, the Australian dollar is mostly tracking developments across financial markets. Following a significant rebound, the currency appears to be running out of steam today. This is particularly the case as the AUD/USD pair approaches the top-end of its daily trading range.
Looking at Chinese markets, the yuan is flat against the US dollar after recent strength. The more interesting story today is the sharp spike in the Hong Kong dollar. As the Hong Kong dollar trades in a narrow band defined by the Hong Kong Monetary Authority, significant moves in the currency are fairly rare. Since mid-April, USD/HKD has been trading towards the upper-end of its defined band. Looking at other Chinese financial markets, both Hong Kong's Hang Seng Index and the Shanghai Composite ended the day higher. China-sensitive commodities such as copper have also rallied for the past two sessions. All in all, improving sentiment from China is a positive for the Australian dollar.
While emerging markets and commodities may be rebounding in the short-term, the more important driver for the aussie is the economic cycle. As Chinese growth continues to slow in rate-of-change terms, the Australian dollar is likely to remain under pressure. Our outlook on the Australian dollar remains bearish.
|September 18||House Price Index YoY Q2||-0.6%||2%|
|September 18||RBA Meeting Minutes|
|September 19||RBA Kent Speech|
|September 20||Westpac Leading Index MoM AUG||0.1%||0%|
|September 20||RBA Bulletin|