AUD/USD: Dips under 0.7500 should be short-lived - Westpac

AUD has been softer than we expected over the past week, and there may be an element of correction after AUD’s multi-week outperformance, according to Sean Callow, Rseearch Analyst at Westpac.

Key Quotes

“But given that (1) the US dollar was patchy after the Fed hike (2) VIX remains subdued (3) spec positioning has been slightly short AUD and (4) the RBA reiterated its view that the next move is a hike, it has been a poor week.”

“Local data wasn’t to blame either. To be sure, the slowdown in the pace of job creation is becoming clearer. But it follows unsustainable strength in 2017 and the dip in the unemployment rate might be the public focus.”

“It is now hard to see how AUD/USD can test the key moving averages around 0.7710/40 near term. But if USD sentiment remains lukewarm and commodity prices keep trending higher, dips under 0.7500 should be short-lived.”