AUD 'in period of rest'

We reported earlier that the Australian dollar has seen some serious behind-the-scenes commercial trades from Sydney banks adding pressures; this in addition to an exotic trade expiration.

"RBA FX transactions amounted to $A993m in June, double the ‘usual’ monthly amount, but don’t mistake this for ‘intervention’: FX transactions typically spike in June as it’s financial year-end in Australia," says Shaun Osborne at TD Securities.

Australian dollar outlook: 0.9 at year end

 Camilla Sutton at Scotiabank runs us through her current view on the Aussie dollar:

"AUD is weak, having trended lower during the Asian and European sessions, but still trading within its recent range. S&P affirmed its AAA/stable rating on Australia based on the economy, fiscal and monetary flexibility and strong institutional settings; however it did note that some of the risks are the high external and household indebtedness as well as a weakening in commodity export demand.

"We see AUD as being in a period of rest, but that it will ultimately soften in Q4, closing the year at 0.90."

Latest Aussie dollar drivers

 AUD S&P affirmed Australia’s AAA/stable rating. There were headlines about S&P claims that Australia is vulnerable to “weakening export demand” - that’s merely stating the obvious.

So far, exports to China (and Japan) have accelerated despite talks of a ‘slowdown’.

The quarterly NAB business survey’s ‘capex expectations 1yr ahead’ index rose for the second consecutive quarter, from to 15.4 in Q2, after troughing at 9.7 in Q4 last year.

"While remaining below the LR average of 21, it is nonetheless heading in the right direction, and supports the message of “moderate growth” from the more closely-watched ABS survey. The benefits of a lower AUD should continue to filter through in future reports," says Osborne.