The Australian dollar ended the day mixed yesterday and continues to trade sideways this morning. Given the limited amount of news and economic data releases that have influenced the currency in the past 24 hours, Australian dollar trading has been mostly driven by external events. As such, the currency is weakening against the euro while trading sideways against the US dollar. Commodity currencies including AUD have been fairly week in recent history. Despite continued strength in industrial commodities, the Australian dollar has been weighed down by a bearish outlook for 2018. Our medium-term outlook on the Australian dollar remains bearish.
AUD/USD is currently down slightly and trading just above 0.7650. Looking at EUR/AUD, the pair is up slightly and currently just above 1.5510. The GBP/AUD exchange rate is flat and currently above 1.7440.
This is a very light week for economic data and events relating to the Australian dollar. The government’s mid-year economic and fiscal outlook projected a shrinking budget deficit. The RBA’s meeting minutes highlighted confidence regarding the future while noting weakness in consumer spending. Last week, employment changes beat expectations by a wide margin.
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.