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Sean Callow, Research Analyst at Westpac, points out that AUD/USD remains near 3 week highs, with considerable fundamental support and is likely to find support under 0.7500 levels.

Key Quotes

“The RBA’s optimistic growth outlook is well understood and contrasts (albeit not dramatically) with recent more dovish notes from the RBNZ, ECB and BoE. Construction data this week leaves Australian Q1 GDP (6/6) on track for growth in at least the high 2%yr area, even 3%.”

“This should leave markets pricing a good chance of a Q2 2019 RBA rate hike. Meanwhile, the FOMC minutes have been read dovishly, suggesting 2 more Fed hikes this year (Westpac’s base case) rather than 3.”

“Commodities have taken a step back this week but we caution not to be too bearish on China coal demand. All this argues for AUD/USD to find support under 0.7500, but if EM stresses persist, rallies should be capped near the 50dma around 0.7630.”