In Australia the Conference Board leading index fell in August. This in turn suggests rising downside risks to growth. However, as confirmed by this week’s RBA minutes considerably weakening conditions may be needed in order to make a case of the central bank considering lower rates anytime soon.
If anything, we expect the AUD to stay driven by external factors such as global risk sentiment.
As remain of the view that the Fed will consider higher rates later this year and as the ECB is unlikely considering additional policy action this week, risk sentiment may turn sour anew.
Accordingly we advise against buying the AUD, in particular against the USD.
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