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FX Strategists at UOB Group has shifted their outlook on the Aussie Dollar to neutral from bearish in the short-term horizon.

Key Quotes

24-hour view: “The sudden surge in AUD yesterday came as a surprise and it appears that a short-term bottom is in place. The AUD strength is viewed as a corrective rebound for now but further advance to 0.7205 would not be surprising. Support is at 0.7145 followed by 0.7130. The 0.7093 low seen early yesterday is not expected to come into the picture”.

Next 1-3 weeks: “The sudden overnight surge in AUD, after WSJ’s report on possible new trade talks between US and China came as a surprise. The break of the 0.7160 ‘stop-loss’ (high of 0.7183) indicates that Tuesday’s (11 Sep) low of 0.7085 is the extent of the bearish phase. In other words, the bearish phase that started earlier this month has ended. The current price action is viewed as the early stages of a consolidation/correction phase. From a short-term perspective, the rebound could extend higher but any AUD strength is view as part of a 0.7100/0.7240 consolidation range and not the start of a sustained up-move”.

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