AUD/USD to mostly trade with a 0.77 handle – Westpac

The soft US dollar tone post-FOMC has provided AUD/USD with a boost it surely needed, according to Sean Callow, Research Analyst at Westpac.

Key Quotes

“Ahead of the Fed headlines, the pair was trading fresh 3 month lows around 0.7675. Australia’s key commodity prices extended their poor run, with our measure of Australia’s commodity basket down 4.3% so far this month, to lows since late November.”

“At that time, AUD/USD was around 0.7625, yet yield differentials have move further against the Aussie, leaving short term fair value below 0.75. US-led trade tensions continue, with the G20 forced to again leave out of its statement its previous commitment against protectionism due to the US stance. And Trump’s anti-China trade steps will extend the battle.”

“On the positive side, Australian job creation keeps barrelling along. And near term, a softer US$ tone is probably enough for AUD/USD to mostly trade with a 0.77 handle.”