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Sean Callow, analyst at Westpac, notes that AUD/USD is about 0.5c lower over the week, which is a reasonably resilient performance given A$ is the clear 1 proxy for US-China trade relations, well ahead of the yuan itself.

Key Quotes

“Positioning of active funds in futures is firmly negative – see chart – but not yet extreme, so the imposition of further tariffs by both the US and China on Sunday could yet see another probe lower.”

“A steady hand from the RBA should help A$ somewhat though Q2 GDP the next day isn’t shaping up as a turning point towards its more optimistic growth outlook.”

“Outsized dividend payments by resource companies remain potential background support through mid-September, providing some insulation from trade war headlines. But our index of Australia’s key commodity prices is -11% over the past month, so the good news on the export front is largely behind us.”

“The various offsetting factors suggest a neutral bias on the week but probably with some probes of the 0.6677 (RBNZ -50bp) 7 Aug low.”