AUD Underperforms, But Technicals Still Bullish

The AUD was the worst performer on Friday against the USD, excluding JPY, down 0.6%, as the USD strengthened on higher yields. It has weakened slightly this morning and is trading just above 0.64 after a high of 0.6480 on Friday.

• The initial support of 0.6401 appears to be holding AUDUSD above 0.6400. The next support is the October 25 low of 0.6303. The outlook for the AUD has become bullish since it recovered from 0.6170 (October 13 low). The focus is now on 0.6570, the 50-day EMA, and key resistance.
• AUD lost against European currencies on Friday. AUDGBP fell to 0.5520 on better political optimism in the UK and is now trading just above this level. AUDEUR continues to trend down and is now around 0.6430.
• Equity markets were up across the board in the US and Europe, except the FTSE. VIX maintained its downtrend and finished Friday at 25.75%. Oil prices fell just over a percent, as the USD strengthened. But they still ended the week about 4% higher. Base metals were broadly lower. Iron ore trended down over the week and is at $78.40, on weak steel demand concerns, especially from China.
• Today the focus will be retail sales for September, which are expected to rise 0.4% m/m. There is also Melbourne Institute inflation for October. The markets are waiting for the RBA meeting tomorrow.