AUD/USD: Downward direction - Westpac

Sean Callow, Research Analyst at Westpac, sticks to their weekly downward direction for AUD/USD as the US dollar looks to be on a sounder footing, so AUD would need some substantial domestic positives to offset its usual role as a high beta play on the greenback.  

Key Quotes

“One positive is global risk appetite, with S&P 500 volatility benchmark VIX back below 10% and key global indexes holding up well (underperformance of the ASX doesn’t seem to be important for AUD).”

“The RBA should also retain its upbeat growth view though there is no reason to expect a hawkish tone. Data should be mixed – trade potentially supportive, retail muted given consumers’ struggles.”

“Speculative positioning (at least on CME) remains very long AUD, so profit-taking is an ongoing risk as the 8 Sep highs above 0.81 retreat into the rearview mirror. A stronger USD would mean AUD/USD edges towards 0.7760.”