2019-11-11 • Updated
AUD/USD is trading sideways this week within the range between 0.7470 and the tail of 100-day MA at 0.7515. Tomorrow Aussie-watchers will be focused on Australia’s labor market data which can show slow earnings growth, and weaken AUD in the short-term. Also, there will be the Reserve Bank of Australia’s Financial Stability Review coming out at 4:30 am MT time.
Citi
Citi analysts are bearish on AUD/USD in the short-term. They expect a drop towards 0.72 – 0.73 area, once the pair breaks 0.7409
NAB
NAB analysts suggest 4 reasons of the recent AUD weakness:
1. The RBA’s statement delivered on 4 April acknowledged the weakening in Australia’s labor market and removed any risk of higher interest rates over the next year.
2. Geopolitical tensions were pressuring the Aussie since last Friday (after the launch of US missiles on Syrian airbase). There is a risk of further escalation of the conflicts in the Asia-Pacific region and in the Middle East. It will be a significant headwind for AUD in the near-term.
3. Continued economic slack of China’s economy (there were signs of softening in China data). Australian commodity export prices are likely to come under pressure over this and next year.
4. The breach of significant supports in the 0.7580-85 area opened the way towards lower levels at 0.7480/0.7470.
NAB’s tips
NAB analysts don't recommend getting too bearish despite the numerous fundamental factors that we’ve listed above. They suggest targeting AUD/USD at 0.75 for end-Q2, 0.73 for end Q3 and 0.70 for Q4.
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Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Oil prices rebounded slightly on Friday but are still expected to show losses for the week due to concerns about slowing growth in the US and China. US crude futures rose 2.7% to $70.41 per barrel, while the Brent contract increased by 2.5% to $74.33 per barrel.
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.
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