AUD looks less appealing - Westpac

Sean Callow, Research Analyst at Westpac, suggests that the 0.77 handle is continuing to prove difficult for the AUDUSD.

Key Quotes

“Offshore factors remain key, with the US dollar on a stronger footing and rising sovereign bond yields making AUD look less appealing.

Our more upbeat DXY outlook for the month ahead suggests AUD/USD slips a little to 0.75, while still well within our estimate of its fair value range – see chart. But so long as risk appetite doesn’t deteriorate too sharply (e.g. Trump resurgence), AUD should hold up well against the likes of USD, NZD and EUR.

As the RBA noted this week, Australia’s terms of trade have improved, with our commodity price basket at highs since Dec 2014 (when AUD was 0.83). Low risk of further RBA easing should help limit AUD downside.”