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 Australian dollar strengthens on good economic data, we are upgrading the currency to neutral. Looking at a daily chart of the Aussie, the currency is trading within normal conditions. This is based on various technical indicators.
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.