AUD/USD: Downward bias for the week ahead - Westpac

Sean Callow, Research Analyst at Westpac, explains that AUD/USD’s decline over the last week has not been at all dramatic, but it did print lows since mid-July.

Key Quotes

“We stick to our downward bias for the week ahead given our positive USD outlook but again, don’t expect a dramatic decline.”

“Domestically, the RBA kept its view that “growth in the Australian economy will gradually pick up”, with non-mining investment in particular more promising. But “slow growth in real wages and high levels of household debt are likely to constrain growth in household spending” – a warning validated by today’s dismal 0.6% fall in Aug retail sales. An RBA rate hike is now not fully priced until Nov 2018 (was Sep).”

“China’s week-long holiday means limited direction for AUD from commodities until Mon, while another good week for global equity markets also hints at modest trading ranges. So if yields drive broad USD gains, AUD/USD downside may not extend beyond the 0.7781 100dma.”