AUD: Recent gains driven by USD weakness - Westpac

In view of Sean Callow, Research Analyst at Westpac, AUD/USD’s 1.5% gain over the past week places it just equal 5th (with CAD) out of the G10 over the past week mainly because of the USD weakness.

Key Quotes

“The domestic story is broadly unchanged, given a very quiet local calendar.”

“Much of the rally is thus due to the US dollar’s decline and the prospect of USD remaining soft near term is enough for us to have a positive bias for the week on AUD/USD and nudge up our 1 month forecast by a cent, to 0.76.”

“But there is also support for the Aussie from commodity prices. The spot iron ore price has risen in 9 of the past 10 trading days, accelerating this week with a 10% gain, Energy prices are also picking up, with crude oil recovering (a little) lost ground.”

“Assuming little change in RBA tone, USD and the commodity mood should lift AUD/USD ranges to say high 0.75s to low 0.77s.”