Bank of America Global Research discusses AUD/USD outlook and notes that the pair is currently undervalued.

"Intensifying headwinds have dragged AUD/USD below 0.70 and net positioning has moved short for the first time since January (Exhibit 2). 0.6850 is a key line in the sand: the 200-day moving average and the recent low during a brief equity sell-off in March. We see important headwinds (rate differentials, equity risk sentiment, strong USD) but see the outlook for other drivers as more bullish than the market (China consumer spending, demand for industrial metals). Nonetheless, our model suggests fair value is around 0.71, above the spot rate (0.6920)," BofA notes.

'In the near term, risks skew to the upside ahead of tomorrow's jobs report. Last month's report was unusually weak, but one-off factors may have weighed on employment. Our economists think the RBA is likely to remain concerned about sticky core inflation after today's report even if oil prices remain around current levels. Bottom line: we are likely stuck in a range, which would be good for collecting carry; we remain buyers on dips," BofA adds.