TD FX Strategy Research discusses AUD outlook going into next week noticing that this week was challenging for AUD, which dropped around 1.45% and sat in the bottom percentile of weekly returns in the G10.
"While we maintain an upbeat view over the coming year, near-term we see downside risks building, especially after the sharp downside miss in Q3 wage growth…AUD has sold off in part to reflect the negative data premium but further weakness in data momentum highlights the potential that the market starts to revise down their macro forecasts," TD argues.
Trade-wise, TD prefers to express AUD downside via long exposure to EUR/AUD.
"The break of the May 2016 high reinforces topside, with 1.5633 the next key fib level from early-2016 high," TD adds.
Source: TD Securities ResearchOriginal Article
