FX Strategists at UOB Group believe AUD/USD has embarked into a consolidation theme for the time being.
Key Quotes
24-hour view: “AUD ‘didn’t do much’ yesterday as it traded in muted manner within a tight range of 26 pips (between 0.6773 and 0.6799). The price action is still viewed as part of a consolidation phase and AUD is expected to continue to trade sideways for today, likely between 0.6760 and 0.6800″.
Next 1-3 weeks: “AUD spent another day ‘going nowhere’ as it traded in a tight range before closing marginally higher at 0.6781 (+0.04%). While we highlighted on Tuesday (20 Aug, spot at 0.6765) that the “the outlook for the next several days is mixed and AUD could continue to trade sideways for a while more”, we were of the view that “a move above 0.6845 would indicate that AUD is ready a sustained recovery”. However, the protracted consolidation phase (AUD has traded sideways within a 100 pips range for more than 2 weeks now) has resulted in ‘neutral’ momentum indicators and the prospect for a sustained recovery is not high. In other words, unless AUD register a daily closing out of the expected 0.6730/0.6845 range, it could continue to trade sideways for a while more”.
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