AUD Daily Updates

06 November 2017

The Australian dollar remains weak, following last week's poor retail sales numbers. Looking at key pairs including AUD/USD, EUR/AUD and GBP/AUD, the currency is mostly flat this morning. Our medium-term outlook on the Australian dollar remains bearish, although the currency is looking oversold in the short-term and is due for a relief rally.  Looking at economic data, today's TD Securities year-over-year inflation figures (2.6%) failed to make a dent on the currency despite ticking higher. Q3 inflation figures from the Australian Bureau of Statistics showed inflation rising at the rate of 1.8% - below the RBA's 2% target. This may be set to change in the future, looking at the latest TD Securities inflation numbers.  

AUD/USD is currently trading just below 0.7660. Looking at EUR/AUD, the pair is currently just below 1.5170. The GBP/AUD exchange rate is currently above 1.7090.   

This is another pretty light week for the Australian dollar. On Monday, TD Securities year-over-year inflation came in at 2.6% (vs. 2.5% previously). On Tuesday, we’ll get the AiG Performance of the Construction Index. More importantly, we’ll see the RBA Cash Rate Target. On Thursday, we’ll see Home Loans figures. Finally on Friday, we’ll get a statement from the RBA on monetary policy. Last week, retail sales figures widely missed expectations.

Updated 
Outlook
Bearish

After weakening sharply in the latter half of October, we are downgrading the Australian dollar further to bearish. The currency is weak thanks to lower-than-expected inflation rates and falling Australian bond yields. 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