australian dollar strength

The Australian dollar is lower across the board on Monday morning:

  • The pound sterling to Australian dollar exchange rate is 0.57 pct higher on a day-to-day basis at 1.7065.
  • The euro to Australian dollar exchange rate is 0.16 pct up at 1.4391.
  • The Australian dollar to US dollar exchange rate is 0.23 pct lower at 0.9414.

(Please note: The above quotes are from the spot market. Your bank will affix its own discretionary spread to the figures. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering you more currency).

Forecasting a return to strength for the Australian dollar

We hear from Luc Luyet at MIG Bank who today says he believes the near-term outlook favours the continuation of the rebound in the Australian dollar:

"We favour a new phase of strength as the consolidation since June is supportive of a
longer phase of AUD strength.

"In the medium-term, the break above the strong resistance at 0.9345 confirms an improving medium-term technical structure.

"However, the long-term technical pattern remains negative thus far. Therefore, we expect the strong resistance at 0.9843 (21/05/2013 high, see also the 200 day moving average) to cap the medium-term upside potential."

(Are you due to buy Aus dollars and are worried about the Australian dollar strengthening? You are able to secure these current rates but transact at a future date. Get in touch and ask your independent FX broker about locking-in a future contract).

Outlook for this week dominated by labour data

Australia labour market data (Thursday) are important for the AUD this week.

"We forecast a large 30k rebound in employment in September (cf. 15.0) with unemployment steady at 5.8% (cf. 5.8). This assumes that there will be some boost from election workers hired for the 7 September federal poll. However, gains in the AUD are likely to be capped by the ongoing US government shutdown and the approaching US fiscal debt ceiling around 17 October, which will likely see high-beta/high-yielding currencies come under pressure," says Chris Walker at Barclays.

Alex Joiner at Bank of America Merrill Lynch Global Research says he is bullish on this week's release:

"Labor force data will show a solid gain in employment pushed temporarily higher by the Federal election. Business and consumer confidence will also be of key interest to ascertain whether a post-election bounce can be sustained."

Also ahead, China trade data (Saturday) are also important for the AUD, particularly imports from Australia and imports of iron ore.

Barclays forecast exports to grow 5.0% y/y (cf. 5.0% y/y) and imports to increase 6.3% y/y (cf. 7.0%), which may weigh on the AUD.

"In addition to implications for the AUD, Chinese export growth will be likely used as a gauge of external demand conditions, while imports will be a measure of domestic demand conditions in China," says Walker.