AUD/USD: Limited downside in the week ahead - Westpac

Sean Callow, Research Analyst at Westpac, explains that the Aussie has rebounded to the top of the G10 over the past week, up 2.5% bBut of course the bulk of this rally occurred in the aftermath of the FOMC meeting, with AUD once again the high beta anti-USD currency of choice and this role should limit downside on AUD/USD in the week ahead, but it is hard to see the fuel for a sustained break of 0.7740/50 after repeated failures since Nov.

Key Quotes

“The latest setback was Australia’s Feb employment data, including a 13 month high on the unemployment rate and another month of sub-1% y/y jobs growth, with soft hours worked.”

“Pricing for another RBA rate cut remains very low, but the flirtation with a Q4 rate hike is (rightly) fizzling out. We are neutral AUD/USD on the week, with most trade in the 0.7620-0.7740 range.”

“But AUD crosses should be mostly well supported. Iron ore has rebounded above $90/tonne just 8 weeks before the budget and global risk sentiment has taken another step higher.”