AUD/USD seems pricey above 0.80 - Westpac

In view of Sean Callow, Research Analyst at Westpac, AUD/USD has generally held up well but still seems pricey above 0.80 as iron ore futures prices in Shanghai have fallen almost without interruption this month, to lows since late July.

Key Quotes

“Coal is holding up better but overall, Australia’s key commodity prices reinforce our fair value model’s warning that there is probably greater downside risk than upside risk on AUD/USD.”

“Certainly if the US dollar recovery extends in coming days, it would be no surprise to see AUD/USD probe the 0.7850-0.7875 region.”

“But AUD decline should be limited so long as risk appetite remains upbeat. In this regard, we can note that US equity volatility benchmark VIX slipped back under 10% this week and the MSCI World Index reached another record high.”