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AUD likely to be supported over EUR by monetary policy outlook – Westpac

FXStreet (Delhi) – Sean Callow, Research Analyst at Westpac, suggests that the ECB’s very dovish tone this month knocked EUR lower against AUD though the Aussie remains clearly weaker than the levels prevailing early August before China’s CNY surprise.

Key Quotes

“Both AUD and EUR are likely to trend lower against USD multi-week. Further softening in Australia’s key commodity prices should chip away at AUD.”

“But the relative monetary policy outlook should support AUD over EUR. After the ECB’s Oct meeting, markets will position for aggressive expansion of QE in Dec. In contrast, we don’t expect the RBA to validate market expectations of another rate cut. AUD/EUR has scope to around 0.67 (EUR/AUD downside to 1.49) before pulling back to trade mostly AUD/EUR 0.64-0.65 or EUR/AUD 1.54-1.56.”

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