AUD/USD finds tough barrier at 0.7700 – Westpac

Sean Callow, Senior Currency Strategist at Westpac, noted the Aussie Dollar faces strong resistance in the 0.7700 area.

Key Quotes

“AUD/USD 0.76-0.77 is the new 0.75-0.76 for now, having vaulted to near-3 month highs on Australia’s record trade surplus. The past week hasn’t seen any similar such positive data, with Dec retail sales contracting. Sales volumes look decent in Q4 but discount wars suggest the RBA still has little to worry about on inflation”.

“On the positive side, the RBA statement brushed off both Q3 GDP and Q4 CPI, maintaining an upbeat outlook that should be reaffirmed in the SoMP. Markets have stopped toying with the chance of a rate hike by Dec but it is hard to see rate cut talk getting much traction. Jan jobs data should fit the RBA’s description of a “mixed” labour market”.

“With commodity prices still supportive, AUD/USD demand should emerge on dips towards 0.7550/70, while 0.7700 looks hard work for now on the top side given our positive USD outlook”.