Constructive domestic data releases as well as stable risk sentiment has been keeping the AUD in demand of late.
We expect the currency to remain a buy on dips, for instance against the USD and the JPY.
First of all we expect risk sentiment to improve further. This is due to additional room of improving global growth expectations and as investors’ liquidity expectations may continue to rise on the back of the ECB’s more dovish monetary policy stance.
Elsewhere, we expect further improving domestic growth conditions to keep investors’ RBA rate expectations well supported. From that angle this week’s labour data release will be closely watched.
As a result to the above outlined conditions we remain long AUD/USD as a trade recommendation.