AUD/USD should mostly trade sideways to a bit lower – Westpac
|It is a familiar story for the Aussie – above fair value but not at extremes and without obvious catalyst for a correction, suggests Sean Callow, Research Analyst at Westpac.
Key Quotes
“The domestic story remains broadly supportive, reinforced by another strong employment report in Sep, including a 4 ½ year low on unemployment, which should play well with consumers.”
“Yet core inflation in Q3 should be muted – our economists look for just 0.3% q/q – which would keep the RBA firmly on hold in November and prevent markets from more aggressive pricing for a 2018 hike.”
“Australia’s key commodity prices (WCFIAECI on Bloomberg) are flat over the past 4 weeks, while speculative positioning remains very long AUD, at least judging by CME data.”
“The US dollar was the main driver of AUD/USD over the past week, the greenback sliding after soft inflation data. If US$ can avoid similar data disappointment in the week ahead, AUD/USD should mostly trade sideways to a bit lower, trading either side of 0.78 rather than gyrating around 0.79.”
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