AUD Daily Updates

08 December 2017

Australian dollar weakness continues, especially against the US dollar and the British pound. This morning, the currency is trading sideways. The latest weakness in the currency was sparked by yesterday's trade balance figures. As iron ore exports to China fall sharply, there are growing doubts regarding the country's export sector. Previously, the currency was selling off due to weak consumer spending and falling rate hike expectations. Looking at today's news, Chinese trade figures and Australian housing finance figures were better than expected. So far, this has led to a pause in the ongoing sell-off. Our short-term and medium-term outlook remain bearish. 

AUD/USD is currently flat and trading just above 0.7510. Looking at EUR/AUD, the pair is down and currently just above 1.5620. The GBP/AUD exchange rate is up and currently above 1.7960.  

This is a significant week for economic data relating to the Australian dollar. TD Securities inflation was higher than the previous print (2.7% vs. 2.6% prior). The RBA left cash rates on hold but omitted references to "inflation is likely to remain low for some time". Retail sales beat expectations (0.5% vs. 0.3% expected). Q3 GDP growth figures were below expectations (2.8% vs. 3% expected). AiG Performance of Construction Index (57.5 vs. 53.2 prior) was stronger than the previous print while trade figures widely missed expectations (A$105m vs. A$1.37b expected). Home loans (-0.6% vs. -2.5% expected) and investment lending for homes (1.6% vs. -6.2% prior) were better than expected.

Updated 
Short term outlook
Bearish

As the Australian dollar continues to sell off following China's 19th Party Congress, we are downgrading the currency to bearish. Looking at a daily chart of the Aussie, the currency is trading within normal conditions. This is based on various technical indicators.  

Medium term outlook
Bearish

As the currency weakens on lower rate hike expectations and slow growth, we are now bearish on the Australian dollar in the medium-term. Looking at a weekly chart, the Aussie is trading within normal conditions. Our analysis is based on various technical indicators.  

Updated