AUD should outperform EUR in the next few weeks - Westpac

Sean Callow, Research Analyst at Westpac, expects that AUD should outperform EUR in the next few weeks, as we head into the first round of the French presidential election and with Australia’s domestic news flow likely to be broadly supportive.

Key Quotes

“But it is hard to see AUD outperformance beyond the AUD/EUR 0.7200/50 or EUR/AUD 1.38-1.39 area.”

“The euro seems likely to suffer at least temporary jitters as France votes on the first round of the presidential election on 23 April. The National Front’s Le Pen has a strong chance of beating a large field of contenders in the first round, quite possibly knocking out the candidates from the two traditional parties (Fillon and Hamon). While Macron would still be the favourite on 7 May, EUR should weaken somewhat ahead of that date.”

“In Nov-Dec 2016, Australia’s key commodity prices reached highs since May 2014. Prices have fallen only modestly since and are likely to hold up near term, but shouldn’t revisit those highs.”