The Australian dollar is currently weakening against all major currencies except the Japanese yen. Yesterday, the aussie strengthened against its US counterpart, but ran into sellers around 0.7150. Note that trading volumes in Australian dollar futures decelerated yesterday both relative to the previous session and compared to 30-day averages. This suggests that traders did not buy the rebound with conviction. Today's AUD/USD trading range is 0.7090 - 0.7360.
Looking at domestic news, the RBA's October meeting minutes did not include any new forward guidance. The Reserve Bank remains on hold, and commented that interest rate stability is a source of confidence. While the RBA did note weakness in key housing markets, the Bank also noted that increases in mortgage interest rates were fairly modest. Commenting on growth, the RBA noted that data points to solid growth in the third quarter, with growth thereafter more likely to moderate. Predictably, there were no significant reactions in the Australian dollar following the minutes.
Instead of local events, developments across financial markets more broadly remains the primary driver for the Australian dollar. Looking at Chinese markets today, both the Shanghai Composite and Hong Kong's Hang Seng Index ended the day lower. Commodities heavily reliant on Chinese demand, such as copper and industrial metals, are also falling today. Given Australia's significant trading relationship with China, the aussie tends to track Chinese financial markets on a day-to-day basis. The currency continues to weighed down by China's ongoing slowdown as a result. Our outlook on the Australian dollar remains bearish.
|October 16||RBA Meeting Minutes|
|October 17||RBA Debelle Speech|
|October 18||Employment Change SEP||44K|
|October 18||Full Time Employment Chg SEP||33.7K|
|October 18||Unemployment Rate SEP||5.3%|