4 Aug 2015
AUD/USD downside still in play, hitting 0.74 upside target - Westpac
FXStreet (Guatemala) - For AUD/USD, analysts at Westpac Banking Corporation explained that the medium term downtrend bias remains in play.
Key Quotes:
"However long term trend channel support (lower in August at 0.7210/40) is a significant obstacle and warrants caution.
AUD has held up fairly well in the face of weak China PMis and broad commodity weakness, though we highlight the outperformance of iron ore (for however long).
The RBA provided some insulation by dropping its prediction of further AUD depreciation. There were probably plenty of AUD shorts to be covered on the surprise statement, with last week’s CFTC data showing speculative net short AUD positions the largest since Aug 2013 (83k contracts combined leveraged funds and asset managers).
Momentum could take AUD/USD to around 0.7400 short term, perhaps even 0.7490/0.7510. But to sustain gains multi-day/week, we would need to see fresh positives from commodities and yield differentials. After all, Governor Stevens has always played down the importance of jawboning on AUD and today’s statement does not rule out further monetary easing. Overall, the RBA has helped AUD/USD solidify its position in a rough 0.7250-0.7450 range but probably no more than that."
Key Quotes:
"However long term trend channel support (lower in August at 0.7210/40) is a significant obstacle and warrants caution.
AUD has held up fairly well in the face of weak China PMis and broad commodity weakness, though we highlight the outperformance of iron ore (for however long).
The RBA provided some insulation by dropping its prediction of further AUD depreciation. There were probably plenty of AUD shorts to be covered on the surprise statement, with last week’s CFTC data showing speculative net short AUD positions the largest since Aug 2013 (83k contracts combined leveraged funds and asset managers).
Momentum could take AUD/USD to around 0.7400 short term, perhaps even 0.7490/0.7510. But to sustain gains multi-day/week, we would need to see fresh positives from commodities and yield differentials. After all, Governor Stevens has always played down the importance of jawboning on AUD and today’s statement does not rule out further monetary easing. Overall, the RBA has helped AUD/USD solidify its position in a rough 0.7250-0.7450 range but probably no more than that."