WEEKLY CURRENCY OUTLOOK

Summary

• We have high-impact data this week for the AU market, which could impact the AUD/USD.
• USD is likely to weaken over this week with risk to the upside for the AUD to gain strength.
• Expecting the AUDUSD to range between 0.6680 and 0.6570 this week on technical analysis.

– We expect the RBA to keep their policy interest rates on hold for this week, however, the risk is that a 25bp hike may come into play which could cause market volatility from the surprise move.

– A surprise will likely support the AUD pairs, adding strength to the AUD/USD pair.

– Most economists have a terminal rate of 3.85% which is where AU rates currently sit, whereas some bank economists are suggesting there are two more rate hikes left in the cycle.

– If the RBA leave the cash rate on hold and guidance unchanged, we could expect the AUD/USD to fall almost 0.4%-0.5%.

– Last week’s 5.75% wage price index rise supports the potential 25bp increase this week.

-There are no major key events this week that could support the USD this week.

– Last week’s Non-Farm payrolls saw jobs surging by 339k and the unemployment rate rising to 3.7%, which weakened the USD.

– The risk is primarily to the upside for the AUS/USD pair this week, watch this space!