AUD’s break of 0.76: Less than spectacular - Westpac
Sean Callow, Research Analyst at Westpac, explains that risk-sensitive AUD and NZD are clear underperformers over the past week, but the Aussie was hit harder by local wages data than by equity gyrations this week and was the catalyst for AUD/USD finally breaking below 0.7600 for the first time since early July.
“But Australia’s business sentiment and officials jobs data reinforced the RBA’s upbeat growth outlook, so AUD doesn’t seem likely to suffer much follow-through selling near term on domestic data, especially with the local calendar quiet next week.”
“And if global risk appetite isn’t about to crater, then AUD/USD will take its cue from the US dollar mood. We have lost some faith in the greenback’s prospects over the week, summed up by another failure of the 10 year Treasury note yield to extend probes above 2.40%. US growth remains quite encouraging, with retail sales data indicating momentum in consumer spending from Q3 into Q4.”
“But the obstacles to Congress delivering tax cut legislation before year end are growing. The House bill could pass this week but the Senate version is very different. We will see whether the differences are reconcilable.”