According to analysts from Rabobank, a break above 0.7700 in the AUD/USD pair would need more good news. They see the pair ending 2017 around 0.74.
“Since the start of the year the value of AUD/USD has risen over 7% on the back of improved economic data and rising confidence of steady policy from the RBA this year. CFTC data indicate that speculators have been becoming more constructive on the AUD for four consecutive weeks and that long AUD positions have recovered to the levels held before the weak Q3 GDP report was released in early December. That said the AUD/USD0.77 level is providing strong psychological resistance suggesting another round of good news may be required to push higher.”
“In view of the recent efforts made by the Chinese authorities to tighten lending and the uncertainty around the outlook for iron ore prices, we see risk that the recent improvement in sentiment surrounding the Australian economy could fizzle. In turn this would re-focus attention back on the issues of persistently weak wage rises and low inflation.”
“In our view, the RBA may not yet be done with rate cuts this cycle. In the near-term we would look to sell rallies to AUD/USD0.77. We expect AUD/USD to end the year in the 0.74 area.”