The Australian dollar is up slightly this morning, after trading sideways yesterday. The Aussie is doing well against all major currencies including the US dollar, euro and pound. The currency was supported by stronger-than expected employment figures and lower-than-expected unemployment numbers. Data from China also helped, with industrial production and retail sales beating expectations.
AUD/USD is currently trading above 0.7870. Looking at EUR/AUD, the pair is currently just above 1.50. Finally, the pound is down against AUD this morning. The GBP/AUD exchange rate is currently below 1.6760.
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. Changes in employment (19.8 vs 15k expected) and the unemployment rate (5.5% vs 5.6% expected) beat expectations. Last week, consumer and business confidence surveys as well as housing loans numbers were above expectations.
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.