The Australian dollar ended the day higher yesterday and continues to strengthen this morning. While there has been a limited amount of news or economic data that has directly influenced the currency, the Australian dollar is strengthening thanks to stronger-than-expected inflation data from Canada. Canadian economic data showed that headline inflation was rising at a faster-than-expected pace of 2.1%. As the fortunes of the two currencies are linked by global commodities, the Australian dollar followed the Canadian dollar higher. Our medium-term outlook on the Australian dollar remains bearish.
AUD/USD is currently up and trading just above 0.7710. Looking at EUR/AUD, the pair is down and currently just above 1.5360. The GBP/AUD exchange rate is down slightly and currently above 1.7340.
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.