AUD: Good news keeps coming from commodity markets - Westpac

Sean Callow, Research Analyst at Westpac, suggests that the good news keeps coming from commodity markets as Westpac’s basket of Australia’s export prices is up 40% since end-May and the surge should show up clearly in official data soon.

Key Quotes

“Coal exports are likely to have risen about A$1.2bn to $4bn in Sep alone.

This raises AUD fair value estimates and at the very least makes it difficult to be bearish. But price action has been very poor. The CPI-driven bounce was quickly unwound and the spot rate has not been overly sensitive to the commodity bounce. There is skepticism over its durability and concern that a decent amount of Chinese demand is simply fear of a falling yuan. Specs on CME are also rather long AUD already.

This suggests AUD/USD 0.7725/50 remains difficult to sustain but buyers return on dips towards 0.7500.”