AUD/USD: November’s decline remains in progress, targeting the 0.7170 area – Westpac

AUD/USD seesaws around 0.7200. A likely extension of broad USD gains near-term suggests a test of 0.7170, perhaps even 0.7106, according to economists at Westpac. 

Daily correlation between the AUD and commodity prices has softened 

“Most eye-catching is iron ore, up about $15 in 4 days to $103/t as expectations grow for loosening of curbs on China’s property market. While the daily correlation between the aussie and commodity prices has softened over recent weeks, it is a helpful development, especially given the substantial spec short AUD positions on CME.” 

“GDP dominates Australia’s data calendar, even though so much has changed since lockdown pummelled Q3. Westpac has raised its forecast to a 2.5% QoQ contraction after resilience in construction and capex. Unusually, GDP precedes the RBA meeting, but it shouldn’t cause a policy reassessment.” 

“Likely extension of broad USD gains near-term suggests a test of 0.7170, perhaps even 0.7106 (20 Aug low). But Australia’s rebounding economy should help the pair on crosses near-term and vs USD into year-end.”