The Australian dollar is currently lower against all major currencies. AUD is the weakest against the Japanese yen and the US dollar. Risk sentiment remains weak today, with the Dow Jones Commodity Index (a broad measure of commodity prices) continuing to sell off. As a commodity currency, the Australian dollar tends to broadly track the fortunes of commodity prices. Turning to data, while the Australian trade balance was ahead of estimates, this had a limited impact on the currency. In general, AUD remains weighed down by concerns regarding slowing growth (Q4 GDP missed estimates earlier this week) and the weak outlook for commodity prices. Our short-term outlook remains neutral, while our medium-term outlook remains bullish. We expect to downgrade our medium-term outlook to neutral shortly.
AUD/USD is down today and trading just above 0.780. EUR/AUD is up and trading above 1.5870. GBP/AUD is up and trading above 1.7780.
Looking at economic data relating to the Australian dollar, we'll see Q4 GDP and hear from the RBA. YoY TD Securities inflation accelerated this month (2.1% vs. 2% prior), while MoM building permits were significantly ahead of forecasts (17.1% vs. 4% expected). MoM retail sales (0.1% vs. 0.4%) were below estimates. The RBA kep rates on hold while suggesting growth was set to accelerate this year. Q4 GDP growth (2.4% vs. 2.5% expected) was below estimates. The AiG performance of construction index (56 vs. 54.3 previously) accelerated relative to previous figures. Trade balances (1055m vs. 300m expected) were ahead of consensus estimates. Last week, private capex and the RBA's commodity index were below 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.