The aussie should maintain ranges for now as Q4 global growth is cooling yet equities are resilient. Analysts at Westpac look to buy dips to 0.7180 while the AUD/USD pair is capped at 0.7400.
“Headwinds include China’s ongoing threats to Australian exports (even as both nations sign the RCEP ‘free trade agreement’).
“The global growth pulse too has cooled in Q4 as the US and Europe increase restrictions to control COVID-19. Yet the Bloomberg Commodity Index is holding near highs since March and iron ore is at two-month highs above $125/tonne. China’s industry-led recovery extended in October.”
“Australia’s coronavirus picture remains very positive. Victoria is opening up and encouragingly, jobs were already recovering in Oct, helping drive a stunning 179K job gain rather than the expected -30K.”
“Vaccine hopes are likely to keep equity markets afloat in the face of brutal covid numbers. We are neutral on the week with support around 0.7180/00 and rallies capped at 0.7400. But ranges should eventually break on the top side.”