AUD: Softest G10 currency over the week - Westpac

Sean Callow, Research Analyst at Westpac, points out that AUD is the softest G10 currency over the week as the stability in iron ore prices has not occurred, with Chinese markets returning from a 4 day weekend in a gloomy mood, producing iron ore price lows since Oct 2016.

Key Quotes

“This may not be sustained – see Rob’s chart on p13. But for now, it has helped knock AUD/USD fair value down to 0.7450.”

“The domestic mood has also soured. Pricing for another rate cut by Nov has edged out to -6bp as expectations for Q1 GDP continue to wane. Our 0.4% q/q forecast is not especially bearish but market chatter is likely to focus on the more gloomy estimates. If US equities are skittish on the possible Comey testimony, then AUD/USD will find it even more difficult to rally. Look for sellers in the 0.7450/70 area, with risks to 0.7330 (May lows) on the week.”