The Australian dollar is bouncing back today, and is currently stronger against all major peers except the euro. Looking at recent economic data, headline (1.9% vs. 2.0% expected) and trimmed mean (1.8% vs. 1.9% expected) inflation were both lower than consensus expectations. While lower inflation figures tend to dampen rate hike expectations (weakening the Australian dollar), the figures missed expectations by a fairly small degree. Reactions in the Australian dollar were also limited by the fact that the currency remains in a bullish trend. Looking at Chinese financial markets, lower-than-expected official manufacturing PMIs also had a limited impact on the Chinese yuan, which is currently strengthening. As commodity prices and the Chinese yuan reach new multi-year highs, the Australian dollar is following suit and rising accordingly. Our short-term and medium-term outlook on the currency remains bullish.
AUD/USD is up and trading just above 0.810. EUR/AUD is flat and trading above 1.5350. GBP/AUD is down and trading above 1.7440.
This is a fairly light week for economic data relating to the Australian dollar. NAB business confidence missed expectations (11 vs. 12 expected). The headline consumer price index (1.9% vs. 2.0% expected) and the trimmed mean CPI (1.8% vs. 1.9% expected) both missed expectations. Tomorrow, we’ll see the AiG performance of manufacturing index. There were no economic data releases of any significance last week.
As the Australian dollar strengthens, we are upgrading the currency to bullish. Looking at a daily chart of the Aussie, the currency is looking overbought. This is based on various technical indicators.
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.