AUD/USD topside should also be limited - Westpac

Sean Callow, Research Analyst at Westpac, suggests that the 77 cent handle remains difficult for AUD/USD as this week’s rally was punctured by Australia’s disappointing Sep jobs data, with consecutive falls in total jobs and full-time employment negative y/y.

Key Quotes

“This adds to the interest in the CPI data on Wed. A reading around our estimate (0.9% q/q headline, 0.4% core) would make a Nov rate cut even less likely. But markets will continue to price a risk of further easing in coming months so long as inflation is running below target and the job market has plenty of slack.

AUD/USD topside should also be limited by global bond yields trading at the high end of the year’s ranges. But commodities remain very supportive, helping Australia’s trade balance, fiscal position and nominal GDP. There could be plenty of good news in Dec as this becomes evident. For now, look for AUD to survive any tests of the 100dma, currently at 0.7556.”