AUD/USD: Underperformer for the week - Westpac

AUD/USD has clearly underperformed this week, with rallies proving fragile, even when the US dollar has been under broad pressure, explains Sean Callow, Research Analyst at Westpac.

Key Quotes

“Admittedly global risk appetite has not improved uniformly, with renewed weakness in e.g. Turkey, Argentina and South Africa.”

“But China’s explicit support for the yuan on the same day as Powell’s less hawkish speech should have provided plenty of fuel for covering of what CME reports as substantial leveraged fund AUD/USD shorts.”

“Instead, AUD may still hold some political risk premium, while higher bank mortgage rates provide another reason to delay an RBA hike. GDP is the data focus, with a decent 0.6% expected, softer than Q1.”

“AUD/USD’s 50dma should continue to cap, around 0.7370 but with 0.7200 holding if DXY eases.”