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.
Key Quotes
“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”.
