The Australian dollar is sharply weaker today against most major currencies including the US dollar, the Japanese yen and the euro. Thanks to a rebound in the US dollar ahead of tomorrow's Federal Reserve meeting, commodities and commodity currencies are mostly weakening. Industrial commodities, such as copper (a major Australian export), are currently selling off. Looking at recent data, NAB business sentiment was lower than expectations. The data is not usually a big driver of the currency but lowers the outlook for Q1 2018 GDP growth. Looking at technical indicators, AUD/USD is no longer looking overbought on a daily chart. Earlier, we warned that the pair was susceptible to short-term correction. Our short-term and medium-term outlook on the currency remains bullish.
AUD/USD is down and trading just above 0.8050. EUR/AUD is up and trading above 1.5330. GBP/AUD is flat and trading above 1.7380.
This is a fairly light week for economic data relating to the Australian dollar. NAB business confidence missed expectations (11 vs. 12 expected). Tomorrow, the most important day, we’ll see the consumer price index and the trimmed mean CPI. On Thursday, we’ll see the AiG performance of manufacturing index. There were no economic data releases of any significance last week.
As the Australian dollar rebounds, we are now bullish 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.