AUD Predicted to Remain Under Pressure Long Term, But Near-Term Currency Market Action Could See Further Gains

The Australian Dollar (Currency:AUD) is coming off some early morning strength (See the note @ 08:50 in our Live Streaming channel).

1.7 Level to be Key for GBP/AUD

Richard Driver at CaxtonFX is predicting sideways price action for the GBP/AUD this week:

"The AUD has strengthened against the GBP ahead of the RBA policy meeting minutes due tomorrow morning. The market expects the minutes to outline that the central bank is not in any hurry to cut rates further after its last move that saw rates cut to 2.50%.

"With a quiet week for both the AUD and the GBP, we are expecting sideways trading around the 1.70 level."

Euro / Australian Dollar Exchange Rate Predicted to Suffer Further

Sean Lee at FXWW says the EUR / AUD exchange rate could come under further pressure in coming sessions:

AUD/USD rallied from .9185 to .9230 on the back of decent hedge fund demand, trimming shorts is what I’m hearing. Plenty of solid offers reported on all major interbank near the highs. Reports of very unusual demand in Australian bond markets has given the AUD a boost. EUR/AUD again touched important support near 1.4450.

"EUR/AUD: Sitting on important support levels, a clean break below 1.4450 would open the way up for a deeper retracement towards 1.4200."

AUD vs USD: Overall bearish wave remains intact

A weekly technical forecast from ICN Financial Markets says the Australian Dollar could settle higher against the US dollar in the near term, however the longer-term picture is more problematic for the AUD bulls:

"Price is attempting to settle above 0.9200 resistance level, and the 50-days SMA, stability above this level may signal a move back towards the top of the sideways range at 0.9320-0.9345 key resistance area.

"However, the overall bearish wave remains intact so long as the aforementioned resistance is holding. We will wait for stability above 0.9200 to suggest an intraday bullish sceanrio, but remain neutral for the week."

Sean Callow at Westpac says he is confident the Australian dollar will settle higher in the near-term:

"AUD/USD rose from 0.9160 to as high as 0.9215 then steadied around 0.9185. Presumably reduction of speculative short positions is playing a role. Friday’s CFTC data showed spec accounts cut AUD/USD net shorts to -62.7K contracts from the record short -76.8K the week prior. We remain positive on the Aussie multi-day/week, targeting 0.9300/50"

New Zealand Dollar versus Australian Dollar (NZD/AUD): Uptrend likely to resume

Imre Speizer, Senior Market Strategist at Westpac says the New Zealand Dollar is likely to maintain its dominant position against the Aus dollar:

"The consolidation since 1 August remains in progress. A break outside the near-term 0.8725-0.8875 range will determine whether the correction has legs or it is giving way to a resumption of the uptrend.

"Eventually, we expect the uptrend to resume to above 0.90 by year end. The RBNZ will start hiking next year from 2.50% whereas the RBA will still be easing to 2.00%.

"In the Australian calendar this week, the RBA Aug meeting minutes (Tue) will draw attention but should be superseded by the SoMP. The data calendar offers little inspiration for markets, featuring Jul motor vehicle sales and the Jun Westpac-MI leading index."