• Jul 03 - Australian Dollar At Risk as Investors Weigh Outlook For Future Policy
• Jun 30 - Commodity Currencies Decline On Expectations For Further Global Contraction
• Jun 26 - Australian Dollar At Risk as Investors Weigh Outlook For Future Policy
• Jun 24 - FX Carry Trades Retrace Early Gains as US Equities Show Negative Response to FOMC Statement
• Jun 22 - Commodity Dollars Plunge as FX Carry Trade Demand Wanes
• Jun 19 - Australian Dollar Vulnerable As Risk Appetite Abates
• Jun 12 - Australian Dollar Needs Risk Appetite to Sustain its Drive
• Jun 11 - Australian Dollar Makes Headway as Australian Employment Change Falls Much Less Than Expected
• Jun 10 - New Zealand Dollar Jumps on RBNZ Rate Decision, Australian Dollar Faces Employment Data Overnight
• Jun 05 - Australian Dollar Outlook Hinges Upon Key Trendline Support
• Jun 03 - Australian Dollar Sees Short-Term Boost From GDP Results, But Carry Trade Selloff Takes Its Toll
• Jun 03 - Australian Dollar US Dollar Exchange Rate Forecast
• Jun 02 - Australian Dollar Dominates Despite Dovish RBA Outlook, Though GDP Report Could Disappoint
• Jun 01 - Canadian Dollar Slips After GDP Falls by Most Since 1991, Australian Dollar to See RBA Rate Decision Overnight
• May 29 - Australian Dollar's Strength Hinges on GDP and RBA Decision
• May 22 - Australian Dollar Rides On Demand For Yield And Economic Strength
• May 15 - Australian Dollar Rally Stalls, Correction Could Follow Next Week
• May 13 - Australian Dollar Slips after Government Budget Weighs Down an Economic Leader
• May 12 - Canadian Dollar, Australian Dollar Tumble as Carry Trades Consolidate Gains
• May 08 - Australian Dollar Surges on S&P 500 Strength - Can Rally Last?

 

Fundamental Outlook for Australian Dollar: Bearish

-    Australian Retail Sales better than expected, but lasting recovery unlikely
-    Aussie Trade Balance Surplus halves – what gives?
-    Australian Dollar sees selling opportunity on candlestick formations

The Australian Dollar got an unexpected boost from a surprisingly strong consumer spending report, but limited follow-through suggests few expect domestic fundamentals will continue to improve through the foreseeable future. Domestic Retail Sales showed impressive strength through the month of November, and many expect that aggressive fiscal stimulus packages announced in December will continue to support consumption. Yet analyst likewise cited fast-falling utility and fuel prices as a major driver of retail gains—leaving comparatively little hope for sustained improvement. Elsewhere, Australian Trade Balance numbers were substantially worse than expected; sharp drops in metal ore exports and comparatively stable imports halved the trade surplus. A fast deterioration in global economic conditions poses great risks to demand for Australian exports. As demand for metal and other key industrial commodities falls, Australian export industries—and by extension the domestic currency—are likely to feel the effects.

Overall outlook for Australian economic fundamentals and the domestic currency remains bearish, but the coming week’s key employment change report could force a near-term shift in sentiment. Median analysts forecasts for the report unsurprisingly call for further pullbacks in employment, but surprises could add legitimacy to recently surprising Retail Sales figures. Otherwise, traders will continue to track movements in global risk sentiment. As one of the highest-yielding currencies of the G10, the Australian Dollar remains susceptible to carry trade unwinds. As such, the AUD remains especially vulnerable to the risk-friendly Japanese Yen. Watch major equity indices to gauge shifts in risk sentiment—especially as it relates to similar moves in currency markets.   - DR