Citi comments on the AUD/USD

  • AUD may remain consolidation in the short term

Technical Analysis ...

  • RSI: Oversold
  • Lower lows
  • Technical indicators suggest the AUD/USD may fall toward 0.7016-0.7141 gradually upon consolidation, with resistance at 0.7533

Citi further cite some fundamental factors:

  • Commodities have sold-off broadly in the quarter to date
  • Likely that the commodity sell-off has coincided with renewed dollar strength
  • Though fundamental factors and financial outflows have also underpinned the move
  • Commodity-linked ETFs and passive index investments have seen a total of c$3bn outflows QTD in contrast to c$22bn inflows in 1H'15
  • Reducing its 0-3m point-price target for COMEX gold
  • Reduced its 0-3m downside point-price target for LME copper
  • Remains bearish on Grains and Petroleum prices
  • "As industrial commodity prices plunged, commodity currencies such as AUD sold-off in driven by concerns that low commodity prices could hurt growth prospects and lead to dovish central bank intervention
  • However, with much of the Australian event risk behind us, AUD may remain consolidation in the short term"