AUD: Neutral bias for the week ahead - Westpac

Robert Rennie, Research Analyst at Westpac, explains that this last week has seen a barrage of negative factors hit sentiment towards the A$.

Key Quotes

“These include the run of macroprudential controls announced by the regulator that David covers here (link to article); the 28% drop in iron ore prices from the highs seen in Feb and signs of rising risk aversion.”

“However, it’s important to put the above negatives in context. Macro-controls add to our no change RBA for this year and next; export commodity prices remain high by recent standards; Australia continues a run of record breaking trade surplus; and today’s employment data showed the largest jump in full time employment back to 1987.”

“Thus, we maintain a neutral bias for another week. We see AUD well capped in the 0.7600/50 region (midpoint of our fair value models) and cheap below 0.7350 (through the bottoms of the -1std band).”