FX Strategists at UOB Group remain neutral on the Aussie Dollar and add that a test of 0.7030 looks unlikely for the time being.
Key Quotes
24-hour view: “The sudden and sharp drop in AUD that sliced through several strong support levels with ease came as a surprise. Downward momentum is clearly strong and the focus is obviously at the year’s low of 0.7085. A break of this level could lead to further AUD weakness towards 0.7060. For today, the next support at 0.7030 is likely out of reach. On the upside, 0.7150 is likely strong enough to cap any intraday AUD strength (minor resistance is at 0.7130)”.
Next 1-3 weeks: “While we have expected a lower AUD since last Friday (28 Sep, spot at 0.7205), our conviction level was not high and we indicated on Tuesday (02 Oct, spot at 0.7225), “there is still a slim chance that AUD may test the 0.7140 support but this has to happen within these 1 to 2 days”. That said, the outsized decline of -1.21% yesterday (NY close of 0.7101) was not exactly expected. From here, AUD is still clearly under pressure even though we have doubts about the sustainability of the current weakness. However, a break below the year’s low of 0.7085 would not be surprising but there is a strong support at 0.7030 and this level is unlikely to yield so easily. To put it another way, the prospect for a break below 0.7030 is not high for now. All in, AUD is expected to remain under pressure as long as the ‘key resistance’ at 0.7175 is intact (level previously at 0.7260)”.
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