Australian Dollar (AUD) is likely to consolidate within a range of 0.6465/0.6530. In the longer run, further declines in AUD still appear likely; the next level to watch is 0.6440, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Further declines in AUD still appear likely

24-HOUR VIEW: "We expected 'further AUD weakness' last Friday, but we indicated that 'oversold conditions suggest any decline may not reach the major support at 0.6520 today.' We did not anticipate the sharp selloff that sent AUD plunging to a low of 0.6472. AUD closed at 0.6472 but traded higher at the open today. Downward momentum has slowed somewhat, and AUD is unlikely to weaken much further. Today, AUD is more likely to consolidate within a range of 0.6465/0.6530."

1-3 WEEKS VIEW: "Last Wednesday (08 Oct, spot at 0.6580), we stated that 'downward momentum is starting to build, and the odds of AUD breaking below 0.6555 are increasing.' After AUD broke below 0.6555, we highlighted last Friday (10 Oct, spot at 0.6560) that it 'is expected to continue to decline, likely toward the late-September low, near 0.6520.' Our view of a lower AUD was correct, but we did not expect the subsequent plunge that reached a low of 0.6472. Further declines still appear likely, and the next level to watch is 0.6440. We will maintain our view as long as the ‘strong resistance’ at 0.6575 (level was at 0.6615 last Friday) is not breached."