Sean Callow, analyst at Westpac, points out that last week was the Aussie’s best of 2019, +1.7%, backed by the improving tone on US-China trade and data that seemed to be good enough for the RBA to retain its broadly positive view on the Australian growth outlook.

Key Quotes

“There have been plenty more headlines to support optimism over trade talks and pricing for an RBA rate cut in Oct has been trimmed to 25% and a move by Nov back to 80%.”

“Consumer and business confidence doesn’t augur well for Q3 or Q4 growth.”

“Indeed the rise in AU yields is arguably mostly a US phenomenon, with spreads moving slightly against AUD in recent days. In the week ahead, trade headlines should remain supportive and the RBA minutes might help also.”

“But the firmer DXY we expect post-FOMC and soft AU jobs data are likely to cap rallies. AUD probably needs a positive surprise to close above the 100dma at 0.6906. Neutral on the week.”

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