Listen to the latest market mood for the AUDUSD.

Strong AUD, Weak USD

The outlook for the AUDUSD remains tilted to the upside over the medium term on the reflationary trade. The reflationary trade is that of global synchronised growth on the vaccine roll out optimism.

Treasury Secretary Kennedy said that the Australian economy exceeded expectations and the labour market participation was somewhat surprising (in a good way). This supports the AUD.

The USD remains weak after US 10 year yields fell on a dovish Powell and a weak CPI release yesterday. This weighs on the USD.

Therefore, expect AUDUSD buyers from pullbacks.

Trade Risks:

  • The main risk to this trade is from any risk off tones which pulls commodity currencies lower
  • Any bad news about the vaccine roll out will weigh on stocks and pull the AUD lower, while strengthening the USD.