The Australian dollar is mostly higher today. Looking at the currency against its global peers, AUD is the strongest against the US dollar, the Japanese yen and the Canadian dollar. As the US dollar weakens and global commodity prices rebound, today is a good day for the Australian dollar. Looking at the Dow Jones Commodity Index (a weighted measure of commodity prices), commodity prices are rising towards highs last seen in late January. Turning to Chinese financial markets, the Chinese yuan remains strong (USD/CNH is currently just above 6.30), while both the Shanghai Composite and Hong Kong's Hang Seng Index ended the day higher. As China remains Australia's largest export destination, the currency tends to track the changing fortunes of China's economy. Our short-term outlook on the currency remains neutral, while our medium-term outlook is bullish.
AUD/USD is down today and trading just above 0.7870. EUR/AUD is flat and trading above 1.560. GBP/AUD is up and trading above 1.7840.
This is a fairly light week for economic data relating to the Australian dollar. On Tuesday, we’ll see HIA new home sales. On Wednesday, we’ll see private sector credit. On Thursday, we’ll get AiG performance of manufacturing numbers, private capex and the RBA’s commodity index figures for February. Last week, the wage price index was slightly ahead of consensus estimates.
As the Australian dollar runs out of steam, we are downgrading the currency to neutral. Looking at a daily chart of the Aussie, the currency is trading within a normal range. 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.