The Australian dollar is enjoying a mild rebound, particularly against the USD. While there has been limited news or economic data in the last 24 hours, the currency is enjoying tailwinds from weakness in the world's reserve currency and some recent strength in industrial commodity prices. Australian bond yields are also rising today after falling for most of November. The currency is no longer looking oversold.
AUD/USD is currently up and trading just above 0.7620. Looking at EUR/AUD, the pair is flat and currently just above 1.5510. The GBP/AUD is down and the exchange rate is currently above 1.7430.
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.
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.