Forex Flash: AUD still looks to break lower despite RBA – UBS

With external conditions still volatile, the RBA may have been forced to put some key domestic issues on the backburner just for now, such as enforced rebalancing away from the mining sector. According to Research Analyst Gareth Berry at UBS, “Long-term structural issues cannot be ignored and may move for a much weaker AUD further down the line, but in the short term there remains a lack of consistency in the drivers of price action.”

A very weak open on Monday appeared to be in reaction to fears of a significant wave of tightening out of China, yet most of the declines have since been retraced. In contrast, last Monday was arguably far more destructive potentially for risk currencies in general, but with the exception of the JPY, throughout the session AUD generally managed to hold its own.