With mining dividend conversion behind us and the US dollar likely to remain resilient through the FOMC meeting, risks remain for a test of AUD/USD 0.7200/50. Nonetheless, that’s a buying opportunity on a multi-month view, according to economists at Westpac.
See – AUD/USD: Technical indicators are hinting bullish price turning points – DBS Bank
Larger-than-expected drop in employment
“The RBA was in no mood to do the AUD any favours, with Governor Lowe going out of his way to argue against market pricing for a higher cash rate in late 2022 and 2023. If, as the RBA believes, the cash rate is still 0.1% in late 2023.”
“Domestic data has been somewhat more mixed, with resilient business and consumer sentiment backing expectations for a sharp rebound in the economy whenever Covid restrictions are finally eased in NSW and VIC. But hours worked tumbled in August (-3.7%) as jobs sank -146K, the worst month since May 2020.”
“We remain very bullish on Australia’s 2022 growth prospects, but near term, a fierce battle will rage over the pace of reopening even when vaccination targets start to be reached in October.”
“With mining dividend conversion largely behind us and US$ likely to remain resilient through the FOMC meeting, risks remain for a test of 0.7200/50.”
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