AUD: Pullback in base metals poses downside risks – ING

Base metals have been on a winning streak in recent weeks and this has given the AUD a small lift amid what is still a nervous geopolitical backdrop, according to analysts at ING.

Key Quotes

“Our commodities team note prices have deviated way beyond fundamentals, even after acknowledging that these markets are in a deficit environment. We look for a pullback in the near-term, retaining a bearish view on iron ore prices and this poses some downside risks to AUD.”

“Broader risk environment will be a key driver for AUD given the absence of any key data releases. Geopolitical calm could be AUD supportive, though we note that the fragile nature of global risk sentiment right now means that it won't take much "bad" news to knock AUD lower. On balance, and given the base metals factor, we retain a mildly bearish view this week.”