AUD selling opportunities

The FX space has remained quite volatile, with big swings in euro and AUD related crosses. 

AUD
Source: Bloomberg

The single currency has been the primary driver of the volatility in FX, given traders have been responding to various events across the eurozone. Greek election results were the latest event to drive markets and resulted in a risk-off tone that hurt the AUD. AUD/USD remains under $0.8000 after trading to a low of $0.7859 yesterday. The pair is now back at around 0.7917 and while it has recovered, it is still facing a number of challenges.

From a fundamental perspective the pair is facing a number of risks, including declining iron ore prices which will continue to hit our terms of trade. NAB business confidence today showed some signs of improvement and this week we also have CPI and PPI data due out. All these readings will help shape up interest rate expectations as we head into next week’s RBA meeting. There will continue to be growing calls for a cut.

Given AUD/USD looks like it is gearing up for a short-term bounce, I feel traders are better off waiting to sell the pair on strength. Any moves into the 0.8000 region are likely to present selling opportunities in anticipation of a more dovish RBA at next week’s meeting. 

 

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.

Find articles by analysts