AUD Daily Updates

07 November 2017

Weakness in the Australian dollar continues, and the currency is down against most major peers including the US dollar and the euro. Today's RBA interest rate decision was yet another non-event. The bank kept interest rates at 1.5% while issuing a fairly neutral statement. Recent economic data from Australia has been disappointing, and suggest that GDP growth may be slowing in rate-of-change terms. 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. 

AUD/USD is currently trading just below 0.7660. Looking at EUR/AUD, the pair is currently just below 1.510. The GBP/AUD exchange rate is currently above 1.7170.   

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). The RBA maintained its cash target rate at 1.5%. On Wednesday, we’ll get the AiG Performance of the Construction Index. 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 
Short term outlook
Neutral

As the Australian dollar rebounds from oversold conditions, we are upgrading the Australian dollar to neutral. Looking at a daily chart of the Aussie, the currency is looking oversold. This is based on various technical indicators.  

Medium term 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