The Australian dollar is mostly higher today. The currency is rallying against all major peers including the US dollar, the euro and the Japanese yen. Looking at economic data, the latest TD Securities inflation figures were lower than the previous print (2.3% vs. 2.7% prior). While Australian 10-year government bond yields are slightly higher (potentially supporting the currency), the main driver of AUD today is likely to be the result of strength in the Chinese yuan. Following news that Germany plans to add the Chinese yuan to its portfolio of foreign reserves, the Chinese currency is sharply higher. As China is Australia's leading destination for its exports, the Australian dollar has followed suit and is trading higher as well. Looking at AUD/USD, the pair continues to look overbought on a daily chart. Our short-term outlook on the currency is bullish, while our medium-term outlook remains neutral.
AUD/USD is currently down and trading just above 0.79450. EUR/AUD is down and trading above 1.5370. GBP/AUD is down and trading above 1.7280.
This is a very light week for economic data relating to the Australian dollar. We'll get consumer sentiment, investment lending for homes and home loans on Wednesday. Thursday is the big day, and we'll get employment figures as well as HIA new home sales. Last week, retail sales beat expectations by a significant margin.
As the Australian dollar strengthens thanks to strong commodity prices and global growth, we are upgrading the currency to bullish. Looking at a daily chart of the Aussie, the currency is now looking overbought. This is based on various technical indicators.
As the Australian dollar rebounds thanks to strong global growth, we are now neutral 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.