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AUD/USD keeps riding the wave – Westpac

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Mar 18, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    Sean Callow, Research Analyst at Westpac, suggests that the dovish Fed tone came just in time for the AUD/USD rally, which had looked set to peter out after a failed attempt at 0.76 earlier in the week.

    Key Quotes

    “The record-breaking 18.6% surge in the spot iron ore price on 7 March had been followed by 6 straight daily falls, fully unwinding the stunning rally. All signs are that iron ore export volumes will continue to grow, while China’s Jan-Feb industrial production growth pace of 5.4% y/y was the slowest since the GFC. This is in line with our base case that iron ore spends most of the next year inside $35-45/tonne.

    The commodity outlook and our Fed view clearly suggest AUD/USD downside risks into mid-year. But short term, the RBA’s steady hand contrasts with ultra-low yields in the G7, supporting AUD. The more positive global risk mood should also encourage speculative demand for AUD. So rather than topping out just short of 0.76, AUD/USD may be able to surf this wave to the 0.77-0.78 region that prevailed last June.”
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