AUD: Hard to break broad trading ranges – Westpac

According to analysts at Westpac, a low key global calendar this week might make it hard for the Aussie to break broad trading ranges.

Key Quotes

“The US dollar fell against all G10 currencies over the past week, allowing AUD/USD to rise about a cent, leaving it well above the 18 month lows near 0.73.”

“The US dollar fell against the yuan and also against a wide range of currencies including AUD which bounced from 0.7340 to 0.7400 and has remained broadly supported since.”

“The US dollar took another step lower in Friday’s US session, after a mixed June employment report.”

“In Australia, we saw mixed data for May: better retail sales but softer building approvals and trade surplus. The RBA held the cash rate steady of course and its statement was mostly upbeat on the Australian economic outlook. One big change was the guidance on the A$. Every meeting from April 2016 to June 2017, the RBA warned that “an appreciating exchange rate could or would be expected to result in a slower pick-up in economic activity and inflation”.”

“For no obvious reason, this guidance was dropped in July, with the RBA noting simply that “the dollar has depreciated a little, but remains within the range that it has been in over the past two years”. Perhaps this suggests that the RBA is happy with the current level.”

“Australia’s calendar this week features business and consumer confidence surveys plus housing finance approvals data – not typically market-movers. This should keep the focus offshore, especially on US-China trade tensions. It would probably take a major surprise for AUD/USD to break out of a 0.7350-0.7500 range.”