Further range bound appears likely around AUD/USD in the short-term horizon, comment Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group.

Key Quotes

24-hour view: We highlighted last Friday that “there is scope for AUD to test 0.6400, but a clear break above this level is unlikely.” In NY trade, AUD dropped sharply to 0.6313 before snapping back up to a high of 0.6400. AUD closed at 0.6385 ( 0.23%) but traded on a soft note in early Asian trade today. That said, there is still room for AUD to test 0.6400 today. However, a clear break above this level still appears unlikely. Support is at 0.6335, followed by 0.6315. 

Next 1-3 weeks: Last Tuesday (03 Oct, spot at 0.6365), we held the view that AUD “is likely to weaken to 0.6330, possibly 0.6280.” After AUD plunged to a low of 0.6283, we highlighted on Wednesday (04 Oct, spot at 0.6310) that “the swift decline in AUD appears to be overstretched, but it has not stabilised.” We added, “AUD must break and stay below 0.6280 before further decline is likely.” On Friday (06 Oct), AUD tested our ‘strong resistance’ level at 0.6400. While the level has not been clearly breached, downward pressure has more or less faded. In other words, the AUD weakness has stabilised. From here, AUD is likely to trade in a range, probably between 0.6280 and 0.6440.