The Australian dollar is mixed today. The currency is selling off against the US dollar, while trading sideways against the euro and the British pound. After strengthening on improving risk sentiment yesterday, the currency appears to be running out of steam today. Riskier assets such as equities and commodities have been underperforming lately. Equity markets including Hong Kong's Hang Seng Index and the S&P 500 have only registered small gains over the past few trading sessions. Looking at commodities, the Dow Jones Commodity Index (a broad measure of commodity prices) has been flat for the last four trading days. As a commodity currency, the Australian dollar tends to be strongly correlated with global risk appetite.
Turning to domestic data, falling home loan growth suggests a slowing outlook for the country's important real estate sector. NAB business confidence met expectations. Our short-term outlook remains neutral, while our medium-term outlook remains bullish.
AUD/USD is down slightly today and trading just above 0.7860. EUR/AUD is flat and trading above 1.5650. GBP/AUD is flat and trading above 1.7650.
Looking at economic data relating to the Australian dollar this week, we'll see home lending and consumer confidence figures. Home loans (-1.1% vs. -0.1% expected) were below expectations. Investment lending for homes (1.1% vs. -2.6%) accelerated from previous figures, while NAB business confidence (9) met expectations. RBA Assistant Governor Bullock's speech did not address monetary policy. On Wednesday, we'll see Westpac consumer confidence. RBA Assistant Governor Kent will deliver a speech on that day as well. On Thursday, we'll see consumer inflation expectations and the monthly RBA bulletin. On Friday, we'll hear from RBA Assistant Governor Debelle. Last week, Q4 GDP growth came in below expectations.
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.