AUD Daily Updates

17 May 2018

The Australian dollar is currently rising against all major currencies. The Aussie is the strongest against the Japanese yen and the US dollar. Yesterday, the currency also strengthened significantly against major currencies. After looking oversold earlier this month, AUD is currently enjoying a rebound. 

Turning to recent developments, Australian jobs figures were better than expectations. The participation rate also rose higher than expected. Similar to other developed countries, the Reserve Bank of Australia is grappling with good new jobs figures coupled with weak wage growth. While the RBA remains on hold according to its latest communications, the currency is making gains as rate hike expectations improve. While Chinese financial markets are mostly faring poorly today, AUD has managed to eke out gains. Industrial metals prices are falling today, while both Hong Kong's Hang Seng Index and the Shanghai Composite are down. 

Whereas recent gains will be welcomed by Australian dollar bulls, we contend that the currency is more likely to weaken against the US dollar. Decelerating growth in China coupled with a stubborn central bank is more likely to weigh on the Australian dollar going forward. Our short-term outlook and medium-term outlook on the Australian dollar remains bearish. 

AUD/USD is up and trading just above 0.7520. EUR/AUD is down slightly and trading above 1.5680. GBP/AUD is flat and trading above 1.7960.

In this week’s Australian dollar economic calendar, we’ll see employment data. RBA Assistant Governor Debelle did not address the Australian dollar in his speech, while the RBA’s latest meeting minutes suggested a continuation of the status quo. The YoY Q1 wage price index (2.1%) met expectations, although quarterly figures were lower than expectations. Employment changes for April (22.6k vs. 20k expected) were above expectations, while the unemployment rate (5.6% vs. 5.5% expected) was slightly worse than expectations. Last week, March retail sales missed expectations by a wide margin.

Updated 
Short term outlook
Bearish

As the Australian dollar weakens, we are now bearish on the currency. 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
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