The Australian dollar is up nearly 1% today in a broad rally in risk trades and slump in the US dollar. Westpac highlighted AUD/USD longs as something on its radar before the US CPI data but with the break, I’d expect them to get more-favourable to AUD/USD buys.
AUD/USD has been showcasing more secure credentials, at the higher end of ranges, though lately it’s been more about a softer USD-leg. Momentum dynamics for US yields have shifted and there is no clear path to meaningfully higher US yields for now, not with Powell underscoring once again that sticky inflation trends extend the duration of restrictive policy, as opposed to putting hikes on the table. Tail risk of a faltering jobs market appear to be rising too following the softer April payrolls and last week’s jump in jobless claims.
Here is a look at the chart:
AUDUSD daily
Other Westpac trades include: Buy EUR/GBP at 0.8580, target 0.8675, stop 0.8540. and short AUD/NZD entered 8 May at 1.0985, targeting 1.0855 or lower, with a 50 pip trailing stop-loss.