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Economists at Westpac notes that equity and iron ore wobbles are providing dips to buy into, with soft USD and lack of Reserve Bank of Australia (RBA) concern suggesting another retest of 0.7400 multi-week for the AUD/USD pair which is flat on the week.

Key quotes

“The nervous market mood snuffed out the A$ bounce on Australia’s much stronger than expected labour data. The 111k jobs rise follows 119k in Jul, an encouraging sign for Q3 GDP which we see up 1.8% vs consensus of just 0.4%.”

“Commodities have wobbled in recent days but our base case is that the Fed’s aggressive easing stance (QE running around $120 B/mth) will weigh on USD and support risk assets over time. Look for AUD/USD to find buyers ahead of 50-DMA now at 0.7182, with another test of 0.7400 likely over the next month.”