The Australian dollar is weaker against most major currencies today. AUD is currently the weakest against the Canadian dollar and the US dollar. Yesterday, the currency ended the day higher as risk sentiment improved following comments from White House official Larry Kudlow. Following China's retaliation against US tariffs, markets have been fearing an all-out trade war. Fears of a trade war have diminished as the US and China enter negotiations.
Today, the Australian dollar is weakening thanks to a rebound in the US dollar and weakness across most commodities. While some China-sensitive assets such as copper and Hong Kong's Hang Seng Index are currently strengthening, the Dow Jones Commodity Index (a broad measure of commodity prices) remains weak. Earlier in this week, the RBA's commodity index figures showed that Australian commodity export prices continue to decelerate. Our short-term and medium-term outlook on the Australian dollar remain bearish.
AUD/USD is down today and trading just above 0.7690. EUR/AUD is up and trading above 1.5930. GBP/AUD is up slightly and trading above 1.8270.
Looking at economic data from Australia this week, important events include an RBA meeting and announcement relating to retail sales and the trade balance. Year-over-year TD Securities inflation for March (2.1%) came in line with previous figures. The AiG performance of manufacturing index (63.1) met expectations. The RBA kept rates on hold, while maintaining its current stance on future monetary policy. The Bank is expected to remain on hold. The RBA commodity index figures for March (-2.1% vs. -0.1% expected) missed expectations by a significant margin. MoM retail sales (0.6% vs. 0.3% expected) beat estimates while building permits (-3.1% vs. 0.3% expected) were lower than consensus estimates. The AiG performance of services index (56.9 vs. 54 previously) accelerated from previous figures, while the trade balance (+$825m vs. +$700m expected) was ahead of expectations. Last week, HIA new home sales were ahead of expectations.
As the Australian dollar runs out of steam, we are now bearish 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.