AUD needs a fresh catalyst

Sean Callow

Global markets remain skittish with a laundry list of reasons to worry – from the Italian budget, Fed tightening and rising US bond yields, Brexit and of course US-China trade tensions. Show More

Aussie dollar focused on the Fed this week

Sean Callow

In a previous update, we made the case for an Aussie dollar revival. We pointed out the mostly encouraging domestic data that aligns with the RBA’s optimistic growth outlook, an uptrend in key commodity prices and the possibility that the US dollar would struggle to rally further given how much... Show More

Westpac weekly markets video

Sean Callow

The Australian dollar typically ignores local politics but this week it seems the turmoil in Canberra has been too great to ignore, knocking the Aussie sharply lower before trimming losses slightly once Scott Morrison was chosen. I discuss the context for the AUD fall and whether this focus on domestic... Show More

Westpac weekly markets video

Sean Callow

This week we saw monetary policy decisions in the US, UK and Japan. Only the Bank of England raised interest rates but it was clear that the Federal Reserve is by far the most confident of the major central banks, upgrading its assessment of US economic growth from "solid" to... Show More

Westpac weekly markets video

Sean Callow

The global risk mood has been strong for much of this week, but investor optimism was rattled once again by the latest skirmish in the US trade war with China. In our brief weekly markets video, I take a quick look at where we stand regarding US tariffs and how... Show More

Westpac weekly markets video

Sean Callow

This week AUD/USD fell to its lowest point since January 2017, close to 73 cents. Once again, much of this was simply due to the strength of the greenback, but there was also some pressure from the slide in the Chinese yuan. In our brief video, I take a look... Show More

Westpac weekly markets video

Sean Callow

The Australian dollar is on the back foot today as risk appetite sours, but it has mostly had a good week, reaching 6 week highs against the US dollar. Much of its strength stemmed from Australia's GDP report, where growth accelerated to above 3%. But the details of the report... Show More

Westpac weekly markets video

Sean Callow

Here is Westpac's brief weekly markets video. Last week's Australian wages and unemployment data reinforced our concern that wages growth will not accelerate any time soon. This poses danger to the outlook for both the RBA's inflation target and the government's budget position. The Aussie dollar however, looks relatively resilient... Show More

Westpac weekly markets video

Sean Callow

Just as the Fed looks set to finally hit its 2% inflation target, it releases a statement seemingly aimed at dampening expectations of faster rate hikes. In our brief weekly markets video, I discuss the US dollar and interest rate reaction to the FOMC statement and what this could mean... Show More

Westpac's weekly markets video

Sean Callow

It seems that the rise in the US 10 year Treasury note yield that began in mid-April was the start of something big. In our brief weekly video, I discuss the factors driving the broad-based US dollar revival, including its breadth and how the dollar's yield backing is not just... Show More

Westpac weekly markets video

Sean Callow

China announced tariffs on US imports in retaliation for the US tariffs and then President Trump threatened tariffs on another $100bn of Chinese imports. So it has been a week of trans-Pacific trade tensions. But how worried should we be? In our weekly video, I briefly discuss the key points... Show More

Westpac weekly markets video

Sean Callow

The FOMC delivered the expected rate hike at last week's eagerly awaited meeting. But markets didn't quite get the hawkish tone expected in the quarterly projections. In our brief weekly video, I discuss the market response to the Fed and also the deepening market concern over protectionist trade policy. I... Show More

Westpac weekly markets video

Sean Callow

Here's Westpac's brief markets video. Fed chairman Powell made a splash at his first semi-annual congressional testimony. He sparked a jump in the US dollar and market interest rates by striking a more upbeat tone on the US economy and the monetary policy outlook. I discuss Powell's impact on markets... Show More

Westpac weekly markets video

Sean Callow

Equity turmoil took its toll on the Aussie dollar this week, with a 3% fall. In our brief weekly video, I note the role played by rising US interest rates in stoking the stock selloff and the contrast with the outlook for the RBA after this week's meeting. I also... Show More

Westpac FX video - final for 2017

Sean Callow

The Aussie dollar had a strong week, rising 2% against the US dollar. The local highlight was a stunning surge in Australian jobs in November. In this brief video, I discuss the jobs data and of course the greenback's fall despite the Fed rate rise. I also note a few... Show More

Westpac weekly FX video

Sean Callow

The Australian dollar hit a 5 month low early this week but then recovered. In our brief weekly video, I discuss how the Aussie found support from RBA governor Lowe's upbeat speech and then from a wave of US dollar selling. I also take a quick look at the key... Show More

Malcolm, our Economics team does the longer term forecasts. In his monthly commentary on A$, Bill Evans wrote, ""We confirm our target for AUD to head to USD 0.70 through 2019."" His writeup is on p4 here: https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/Australia/2018/August/WestpacMarketOutlookAugust2018.pdf

On A tipping point for the Aussie dollar? -

Peter, Westpac's year-end AUD forecast in the Feb 2018 monthly report was 0.72. End-Sep forecast was 0.74. And yes, they are sometimes revised! Commodity prices are indeed under pressure this week though our daily index is still in about the middle of the range of the past 5 years. I agree we need to watch the yuan but the PBoC has $3 trillion of FX reserves to ensure it doesn't fall too fast.

On A tipping point for the Aussie dollar? -

Good pickup, Jay, the labels aren't visible - the red line is 60 day correlation, the grey line is 30 day. I am using MSCI World Index in US$ terms so there's plenty of scope for the daily % changes in the 2 series to diverge but lately the relationship has tightened, even though AUD/USD had been range-bound until last week.

On A tipping point for the Aussie dollar? -