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AUD/USD, as a proxy for global risk sentiment and also for China’s growth outlook, will continue to be buffeted by COVID-19 concerns, according to economists at Westpac Institutional Bank. AUD/USD is being exchanged at 0.6545.

Key quotes

“Record short real money positions should mean two-way price action, but we prefer to sell into any rallies above 0.6600.” 

“Fragile industrial commodities and the China travel ban threaten each of Australia’s top five exports (coal, iron ore, LNG, education, tourism), pointing to a collapse in the trade surplus starting in the February data.”

“The extent and timing of likely RBA easing is a swing factor near term but the impact on Australia’s economy will be muted. We see multi-day/week risks to 0.6350/0.6400, our existing 0.66 target by end-June requiring a sharp rebound in Chinese growth.”