The AUD/USD pair was last seen hovering around the 0.7420 region. Economists at Westpac notes that a break above 0.7435/50 would question their bearish outlook, however, the aussie should drop towards the 0.7350/00 area.

Recent commodity weakness is negative for the AUD

“Positive risk sentiment has lifted the AUD/USD towards key moving averages at 0.7435/50 and a break of those levels would tend to question our near-term bearish outlook.”

“While commodities have bounced a little too, we still see the recent weakness (aluminium down 20% from the highs 3 weeks ago and the 62% Mysteel index down 12.7% last week as port stockpiles surged, imports fell, and steel prices slumped) as a negative.”

“Yield support should continue to wane too suggesting we could still see a dip towards the 0.7300/50 region.”