AUD: Considerably overvalued? - Westpac

The Aussie looked to be considerably overvalued but with global risk appetite strong, commodities supportive and the US dollar struggling, a test of 0.8150 was possible, according to Sean Callow, Research Analyst at Westpac.

Key Quotes

“Our preference for a neutral outlook on the week seems justified by the mixed fundamentals. Commodity prices are still supportive, with the Westpac Australian Export Commodity Index edging up to a 3 month high as of 2 Aug. Risk appetite is more mixed, with MSCI Asia-Pacific at a high since 2007 but the mood a little more sour today.”

“Leveraged funds on CME are very long AUD, presenting a headwind for AUD/USD in the event of any rise in risk aversion or broad USD bounces. Still, the key support band at 0.7880/0.7940 is holding for now.”