The Australian dollar is currently selling off against all major currencies. AUD is currently the weakest against the Japanese yen and the British pound. For the last two trading sessions, the currency has made significant gains as US-China trade tensions ease. Yesterday, the currency rose sharply following Xi's speech at the Boao Forum and Trump's tweet stating he was "very thankful" for Xi's words. Today, the currency is reversing course as "risk-on" trades (such as buying the Australian dollar) falter.
Turning to recent news, Reserve Bank of Australia Governor Philip Lowe said that the Board does not see a strong case for a near-term move in interest rates. Echoing his previous statements, Lowe also said that the next move in rates is more likely to be up (not down). Commenting on Australia's economy, Lowe said that household indebtedness remains an issue alongside China's management of risks in the country's financial system. The comments were in line with previous communications from the RBA, and had a limited direct impact on the currency. Our short-term outlook on the Australian dollar will upgraded to neutral later today, while our medium-term outlook remains bearish.
AUD/USD is down today and trading just above 0.7740. EUR/AUD is up and trading above 1.5940. GBP/AUD is up and trading above 1.8340.
Looking at economic data from Australia this week, we'll see sentiment data and housing investment numbers. The AiG performance of construction index accelerated from previous figures (57.2 vs. 56 previously). NAB business confidence for March (7 vs 12 expected) was significantly below estimates. Westpac consumer confidence (-0.6% vs. 0.2% previous) decelerated from previous figures. RBA Governor Philip Lowe stated that rates are more likely to stay on hold. Tomorrow, we'll see consumer inflation expectations for April, February investment lending for homes and February home loans. Last week, the RBA kept rates on hold.
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.