AUD the “Teflon” currency

Despite further concerns about Chinese growth, following the release of the much worse than expected trade data over the weekend, AUD continues to hold gains above 0.90. Additionally declines in key commodities such as iron ore have done little to dent the enthusiasm for AUD. In this respect, AUD is fast becoming the new “Teflon” currency, helped by the neutral stance of the Reserve Bank of Australia and recently positive domestic data such as building approvals, Q4 GDP and January trade data.

The next major test for AUD will be Thursday’s release of the February jobs report. Clearly there has been a worsening in jobs conditions but the worst is likely over and after a decline in employment over the last couple of months some rebound is expected (our forecast +20k, consensus +15k).

AUD is set to consolidate over the near term, with technical support seen around 0.8980.

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