Analysts at MUFG Bank, point out that the Australian dollar has moved closer to a fair value against the US dollar but they warn it remains vulnerable in the near term on a technical basis. Still, they see positive signs for the week ahead.
Key Quotes:
“A currency to watch over the coming two weeks in the G10 space might be AUD. Short-term yields are breaking higher. The stronger Australian employment report for November has reinforced that positive dynamic. The 2-year yield is 24bps higher since the start of December and reached as high as 0.90% today. The November high (0.92%) and the September high (0.94%) could be breached which could trigger some AUD demand.”
“Technically, AUD/USD looks positive with the trendline resistance from highs through the downtrend from June 2018 now breached. If the US dollar maintains a weaker tone over the holiday period, AUD/USD could outperform.”
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