FX Strategists at UOB Group keep the bearish view unaltered around the Aussie Dollar in the near-term horizon.
Key Quotes
24-hour view: “From a high of 0.6585 earlier last Friday, AUD declined before suddenly plunging to 0.6434 during NY hours. The sharp drop was however, short-lived as AUD snapped back up but still ended the day lower by -0.96% (NY close of 0.6507). The range of 151 pips is the largest 1-day range since the ‘flash crash’ in January last year. The rapid and sharp swings have resulted in a mixed outlook. For today, AUD could continue to trade in a volatile manner but is unlikely to move much out of last Friday’s range.”
Next 1-3 weeks: “We have held a negative view in AUD since 21 Feb (when AUD was trading at a higher level of 0.6615) and indicated that the ‘risk for AUD is on the downside towards 0.6550’. When AUD cracked 0.6550, we warned last Thursday (27 Feb, spot at 0.6545) that ‘rapid improvement in momentum suggests AUD is likely to test 0.6500 next’. Instead of ‘testing’ 0.6500, AUD crashed to a low of 0.6435 last Friday before snapping back up to close at 0.6507. The price action resembles a ‘mini flash crash’ (the 151 pips range last Friday is the largest since the flash crash in Jan last year) and while it is too early to expect the current weakness to stabilize, AUD may not be able to maintain a toe hold below the round number support of 0.6400 in the coming weeks. On the upside, only a move above 0.6610 (no change in ‘strong resistance’ level for now) would indicate that current weakness has stabilized.”
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