A firm USD should nudge the aussie lower next week. Nonetheless, the August lows near 0.7100 are likely to hold given existing short positioning overhang, economists at Westpac report.
AUD/USD to challenge 0.7150/60
“We continue to regard positioning as a likely factor in A$ resilience, with CFTC data showing the largest active account net shorts since March 2020.”
“Australia’s domestic situation still isn’t helping the aussie much. The economy should rebound in Q4. But significant relaxation of restrictions in NSW are only phased in during October and only substantially loosened by 1 December. This leaves the RBA on Tuesday to remain wary about the economy’s current condition and whether state premiers will work together on reopening the national economy at key vaccination levels.”
“In the week ahead, the USD mood and UST yields may be key. There seems enough fuel for a test of 0.7150/60 but the 0.7106 August low probably holds.”