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.”
Author
Sandeep Kanihama
FXStreet Contributor
Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.
