Via a couple of morning notes, some thoughts on AUD/USD … agree, disagree, BRB — going to the pub?CBA:
- AUD/USD drifted lower in overnight trade, but has found support at 0.7800. Base metal and coal prices were higher in overnight and yesterday’s trade.
- Election-related selling in NZD/USD appears to have been exhausted, which has eased some of the modest downward pressure on AUD from this source. AUD/NZD remains at attractively high medium-term levels for importers.
- Participants are now looking towards tomorrow’s Australia Q3 CPI report for intra-day direction in AUD/USD and AUD!NZD. We see upside risks to headline CPI, which may generate some strength in AUD as Australia’s two-and-three year bond yields edge higher.
- AUD/USD will likely lift to the 30 day moving average of 0.7881 if the Australian Q3 CPI is higher than expected.
- AUD/USD 1 day: Potential for move below 0.7800 if the US dollar’s recent recovery persists.
- AUD/USD 1-3 month: If the RBA remains firmly on hold, as we expect, and the US dollar rises on delivery of a Fed interest rate rise in December, then AUD/USD could fall to 0.76 by year end. (5 Oct)
—ps. Yes, there is Australian inflation data tomorrow — I stuck up a couple of previews already if anyone is interested:
- Australian Q3 inflation report due this week — preview
- Australia — Q3 inflation report due this week — preview & strategy