AUD Daily Updates

21 November 2017

The Australian dollar is once again weaker following the RBA's latest minutes. While the document contained few surprises, the RBA continues to emphasize high household debt and weak inflation as headwinds to potential rate hikes. Specifically, the RBA pointed to "considerable uncertainty" as to how wage growth will help the inflation outlook. The Bank also pointed out that strength in AUD should slow both growth and inflation. Our outlook on the currency remains bearish. 

AUD/USD is currently down and trading just above 0.7530. Looking at EUR/AUD, the pair is up and currently just above 1.5580. The GBP/AUD is higher and the exchange rate is currently above 1.780.  

This is a very light week for economic data releases relating to the Australian dollar. The RBA’s meeting minutes suggested "considerable uncertainty" regarding future inflation and cautioned against strength in the currency. Last week, wage growth and employment changes missed expectations.

Updated 
Short term outlook
Bearish

As the Australian dollar remains weak, we are downgrading the currency to bearish. 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