AUD/USD Appears Well Supported Around 0.74/0.75 – Westpac
Strategists at Westpac have noted the relevant support zone in the 0.74/0.75 band in AUD/USD.
“The A$ has been hit hard by a trifecta of negative factors in the last week”.
“The combination of last week’s surprisingly soft CPI, yesterday’s rate cut (and the prospect of another cut to come) and the reaction to last night’s budget have left the A$ looking vulnerable against the US$ and very much on the back foot on crosses”.
“However, it’s not all bad news here. With iron ore holding (for now) above $60, premium coking coal closer to $100, export volumes strong in April plus reduced concerns about China/ improved global risk sentiment, it's hard to see the A$ much below 0.74/0.75 near term”.
“AUD is also looking cheap on crosses e.g. AUD/JPY sub 82 and AUD/CAD sub 0.96. It’s unlikely that those levels will drive much demand in the short term though”.
“Friday's SoMP will be closely watched for forecast changes and thus market pricing for ‘the next cut’. That leaves AUD vulnerable in the short term to further losses”.