AUD/USD ranges will surely move lower near term - Westpac

Sean Callow, Research Analyst at Westpac, explains that potentially softer US data could weigh on US yields, limiting AUD/USD downside but ranges will surely move lower near term.

Key Quotes

“CFTC data shows that as at the 28 March NY close, the combined net long AUD position of leveraged funds and asset managers on CME was a high since late April 2016. Soggy AUD price action over the past week or so suggests this is a helpful indicator of active investors having been rather stretched in their AUD stance.”

“Australia’s busy calendar was mixed for AUD, with an encouragingly large trade surplus but poor retail sales and a more downbeat RBA statement. The buoyant housing market means rate cut talk struggles for traction. However, market hawks talking about a Q4 hike have little to work with and OIS pricing is now below 1.50% through year-end.”

“The 50dma of 0.7633 probably caps rallies for now, while downside could extent to around 0.7450/60.”