AUD Daily Updates

16 October 2017

After a big day last Friday, the Australian dollar is taking a breather this morning. Earlier, the Aussie rose on strength in the Chinese yuan. Looking at the yuan in recent times, the currency is mostly flat against most global currencies. As AUD has been strongly correlated to the fortunes of the yuan lately, the currency is likely to follow. 

AUD/USD is currently trading above 0.7880. Looking at EUR/AUD, the exchange rate is now below 1.50, and is currently below 1.4960. The Aussie has been a big mover against the euro, as the currency strengthened as the euro weakened. Finally, the pound is up against AUD this morning, having sold off last Friday. The GBP/AUD exchange rate is currently below 1.6880.   

This is a fairly light week for the Aussie in terms of economic data. RBA minutes set to be announced on Tuesday are unlikely to contain many surprises given that the Bank remains on hold. On Wednesday, we’ll get changes in employment and the unemployment rate. Lower-than-expected numbers will drive down already low rate hike expectations. Last week, consumer and business confidence surveys as well as housing loans numbers were above expectations.  

Updated 
Short term outlook
Bullish

Having breached oversold conditions in early October, the Australian dollar is now rebounding. As such, we are now bullish on the currency in the short-term. The Aussie is strengthening thanks to recent strength in the Chinese yuan. Earlier, the currency fell on poor retail sales and comments from the RBA suggesting that interest rates may be heading down (not up, as expected). Looking at a daily chart of the Aussie, the currency is now trading within normal conditions, and does not appear to be oversold. This is based on various technical indicators.  

Medium term outlook
Neutral

After a strong performance in the second week of October, we are upgrading the Australian dollar to neutral. The currency is rebounding thanks to strength in the Chinese yuan (China is the country's biggest trading partner) and the broader Chinese 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.  

Updated