AUD/USD should print 4 month lows around 0.7375/0.7400 in coming sessions - Westpac

Sean Callow, Research Analyst at Westpac, suggests that it will be very difficult for AUD/USD to benefit sustainably from mostly solid domestic fundamentals and still elevated commodity prices while Asian markets are in turmoil.

Key Quotes

“All key Asian currencies are down vs USD over the past week, despite various official efforts to curb capital outflows. We probably need a sharp rally in US Treasuries to even stabilize Asia, let alone spark a recovery. This would however not assuage fears over trade tensions in a Trump administration.”

“Leveraged fund AUD positioning on CME last week was the longest since the May rate cut, so further unwinding is likely in the week ahead. But at least another RBA rate cut is not a serious prospect in Dec, even after a mostly soft Oct jobs report.”

“AUD/USD should print 4 month lows around 0.7375/0.7400 in coming sessions but commodity support should limit further losses short term.”