AUD Daily Updates

18 October 2017

The Australian dollar is down again today, after weakening yesterday. Looking at industrial metals (Australia's largest exports), copper prices have been weakening lately. Despite the ongoing Party Congress in China, the Chinese yuan is selling off, hurting the Australian dollar as well. Our short-term view on the Australian dollar remains neutral, although we will probably downgrade our outlook if today's sell off continues. 

AUD/USD is currently trading below 0.7830. Looking at EUR/AUD, the pair bounced back yesterday, and is currently below 1.500. Finally, the pound is flat against AUD this morning, having weakened yesterday. The GBP/AUD exchange rate is currently above 1.6810.   

This is a fairly light week for the Aussie in terms of economic data. RBA minutes suggest that monetary policy remains in neutral. The Bank sees a strong economy but subdued inflation. On Thursday, 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
Neutral

After weakening sharply on October 16, we are downgrading the Australian dollar to neutral. Earlier, the Aussie was strengthening thanks to strength in the Chinese yuan. 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