AUD spent most of the past week following broad US$ swings but in recent sessions, it has started to outperform Dollar Index and much of Asia, according to Sean Callow, Research Analyst at Westpac.

Key Quotes

“This is quite impressive given that this week’s data only reinforced how unlikely it is that the RBA would join the Fed in raising interest rates in 2018.”

“Wages growth was soft again and while job creation remained decent in Apr, the unemployment rate ticked up, highlighting spare capacity in the labour market. Pricing for a rate hike doesn’t even reach 50/50 until Q2 2019.”

“Commodity prices are more helpful. As the chart shows, some of Australia’s key commodities are well up over the year, even though recent gains have been more modest (ex-oil). A quiet local calendar leaves AUD to be driven by global factors. If commodities remain supported and equity volatility stays low, AUD/USD should trade mostly 0.7450- 0.7600 and firm on most cross rates.”

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