Further downside in AUD/USD lost traction – UOB

FX Strategists at UOB Group suggested that extra selling pressure in the Aussie Dollar appears to have run out of steam.

Key Quotes

24-hour view: “We expected AUD to “trade sideways between 0.6785 and 0.6820” yesterday. However, AUD staged a surprisingly robust recovery after dipping to 0.6785 (high of 0.6835 during NY hours). While the rapid rebound appears to be running ahead of itself, there is scope for AUD to strengthen further. That said, any advance is viewed as a higher trading range of 0.6800/0.6845 (a sustained rise beyond 0.6845 is not expected for now)”.

Next 1-3 weeks: “When AUD plummeted early last Thursday (14 Nov, spot at 0.6810), we highlighted the downside risk even though we held the view that “any AUD weakness is likely limited to 0.6765”. When AUD extended its decline to 0.6770, we indicated on Friday (15 Nov, spot at 0.6785) “longer-term conditions are still rather oversold and the prospect for a sustained decline below 0.6765 is still not that high”. The relatively strong rebound in AUD yesterday (0.6829, +0.30%) reinforces our view. From here, the odds for further AUD weakness have diminished but only a break of 0.6845 (no change in ‘strong resistance’ level) would suggest the current weakness has stabilized”.