AUD Daily Updates

14 May 2018

The Australian dollar is higher against all major currencies except the euro and the British pound today. The Aussie is making its biggest gains versus safe haven currencies such as the US dollar and the Japanese yen. Last week, the currency moved up sharply towards the end of the week. After warning that AUD/USD was looking oversold, the pair moved higher and is now trading above 0.75. AUD/USD is no longer looking oversold. 

Turning to recent news, there are few noteworthy economic or political developments from Australia today. Instead, the currency is trading as a function of international developments. Risk sentiment is broadly improving as the US dollar continues to head lower. Chinese equity markets, such as Hong Kong's Hang Seng Index and the Shanghai Composite are both up today. China-sensitive commodities such as copper are also up today. 

While the Australian dollar has strengthened for the last four trading sessions in a row, our longer-term outlook on the currency remains bearish. Thanks to an ongoing deceleration in global growth, the Aussie is more likely to remain weak as a result. A slowdown in Chinese economic growth is particularly worrisome for AUD, given the country's significant trading relationship with China. As we explained in a recent commentary, weaker Chinese demand is pushing down commodity prices. Given AUD's status as a commodity currency, the Australian dollar is weakening as a result. Our short-term outlook and medium-term outlook on the Australian dollar remains bearish. 

AUD/USD is up slightly and trading just above 0.7540. EUR/AUD is up and trading above 1.5860. GBP/AUD is up slightly and trading above 1.7980.

In this week’s Australian dollar economic calendar, we’ll see employment data. Tomorrow we’ll hear a speech by RBA Assistant Governor Debelle and see the RBA’s latest meeting minutes. On Wednesday, we’ll see the wage price index for Q1. On Thursday, we’ll see employment changes for April and the associated unemployment rate. Last week, March retail sales missed expectations by a wide margin.

Updated 
Outlook
Bearish

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.  

Updated