AUD/USD: Commodity prices point to 0.70s/ near 0.80 - Westpac

Sean Callow, Research Analyst at Westpac, explains that their recent theme remains very much intact: commodity prices point to AUD/USD in the high 0.70s/ near 0.80, global risk sentiment is also very supportive and the RBA is looking on the bright side of mixed domestic data, keeping rate cut talk at bay.

Key Quotes

“But AUD should be capped against USD by the Fed’s increasingly hawkish rhetoric.”

“This suggests that not only do the early Nov highs around 0.7775 remain intact but that we may not even retest the late Feb 0.7740 area. Still, any shorts above 0.77 would have to be very unambitious in terms of downside targets.”

“AUD/USD hasn’t traded below 0.7600 since 2 Feb when the record trade surplus for Dec was released. The $2bn slump in the surplus in Jan is likely to be a statistical blip that doesn’t have a lasting impact on AUD. Look for further gains on crosses, including clear outperformance within the dollar bloc despite a neutral AUD/USD weekly bias.”