AUD Daily Updates

13 December 2017

After rising sharply yesterday, the Australian dollar continues to strengthen this morning (though admittedly at a slower pace). Reuters is reporting that recent strength in the currency has been driven by a wave of corporate merger & acquisition announcements. Looking at recent data, consumer sentiment was stronger than the previous print. This was fairly surprising given that indicators of consumer health (e.g. retail sales, house prices, etc.) suggest that Australian consumers remain under pressure. Despite recent strength in the Australian dollar, our short-term and medium-term trending indicators continue to suggest a bearish trend.   

AUD/USD is currently up and trading just above 0.7560. Looking at EUR/AUD, the pair is flat and currently just above 1.5520. The GBP/AUD exchange rate is up and currently above 1.7660.  

This is a pretty light week for economic data and events relating to the Australian dollar. Business conditions came in at 12 (vs. 21 prior) while confidence fell to 6 (vs. 8 prior). Quarter-over-quarter house prices fell by 0.2% (vs. 0.5% expected). Westpac consumer confidence was higher than the previous print (3.6% vs -1.7% prior). RBA Governor Philip Lowe's speech did not have a significant impact on the currency. On Thursday we’ll see changes in employment as well as the unemployment rate. Last week, GDP growth missed expectations on consumer weakness.

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