The Australian dollar remains weak, despite limited news or economic data. So far, the currency has been selling off thanks to weakness in the Chinese yuan (China is the country's biggest trading partner) and in industrial commodity prices. The Aussie has been particularly weak against the US dollar, which has been rebounding since the third week of September.
AUD/USD is down this morning, having started the day above 0.7830. The pair is currently trading below 0.7815. Despite broad weakness in the euro, EUR/AUD is only down marginally today, with the pair currently trading above 1.5040. Finally, the Aussie has been flat against the pound so far, with GBP/AUD trading below 1.7090.
Today, we saw fairly strong manufacturing survey data (54.2) and strong inflation figures as well (2.5% YoY). Tomorrow is a big day for the currency, with an upcoming Reserve Bank of Australia interest rate decision and statement. Finally on Thursday, we'll see retail sales, trade balance and construction survey data.
From a medium term perspective, we are downgrading the Aussie to bearish on continuing weakness. The Aussie has weakened in the last three weeks of September, and continues to sell off. The currency is weakening for a variety of reasons including the limited possibility of future interest rate hikes and weakness in China's economy. Looking at a weekly chart, the Aussie has re-entered normal trading conditions having been overbought for most of September. Our analysis is based on various technical indicators.