AUD/USD: Resilient performance – Westpac

Sean Callow, analyst at Westpac, notes that AUD/USD is about 0.5c lower over the week, which is a reasonably resilient performance given A$ is the clear 1 proxy for US-China trade relations, well ahead of the yuan itself.

Key Quotes

“Positioning of active funds in futures is firmly negative – see chart – but not yet extreme, so the imposition of further tariffs by both the US and China on Sunday could yet see another probe lower.”

“A steady hand from the RBA should help A$ somewhat though Q2 GDP the next day isn’t shaping up as a turning point towards its more optimistic growth outlook.”

“Outsized dividend payments by resource companies remain potential background support through mid-September, providing some insulation from trade war headlines. But our index of Australia’s key commodity prices is -11% over the past month, so the good news on the export front is largely behind us.”

“The various offsetting factors suggest a neutral bias on the week but probably with some probes of the 0.6677 (RBNZ -50bp) 7 Aug low.”