AUD Daily Updates

09 March 2018

The Australian dollar is currently higher against all major currencies. AUD is the strongest against the Japanese yen, the euro and the US dollar. Recent strength in the currency suggests that global risk sentiment is improving. Last night, the yen began selling off after President Trump hailed "great progress" relating to North Korea. AUD/JPY has strengthened by a good degree today. For now, the currency is not tracking movements in commodity markets. Looking at the Dow Jones Commodity Index (a broader measure of commodity prices), the index has fallen for the last three trading sessions. While the Australian dollar sold off yesterday, it has earned back most of its losses today. Despite today's strength, the overall trend in the currency continues to weaken. 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 up today and trading just above 0.780. EUR/AUD is down and trading above 1.5760. GBP/AUD is down and trading above 1.770.

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. 

Updated 
Short term outlook
Neutral

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.  

Medium term outlook
Bullish

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.  

Updated