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11 Jun 2013
Flash: AUD/USD strategy profile – Westpac
FXstreet.com (New York) - The AUD/USD simply does not trade as if a near-term low is in sight – for this we need the Fed to push back on tapering.
According to the Westpac Strategy Team, “China is expressing concern about the slowing economy, while stronger Australian data and signs of Japanese buying are also mounting. Ultimately, we prefer to see AUD closer to 0.9300 and AUD/JPY too and possibly through 90.00 before we can be happier a low is finally in place.”
In terms of the AU outright, domestic data continue to suggest that bonds should rally. Hence, in the medium-term we remain better buyers on dips - particularly as the market continues to factor in less than two additional RBA cuts - 25bp less than our expectation. Finally, the AU 3-10yr curve has consolidated over the past week and is currently trading within a 74-84bp range. In the week ahead, while we have a bias towards further curve steepening driven by global moves, we recommend keeping position size light.
According to the Westpac Strategy Team, “China is expressing concern about the slowing economy, while stronger Australian data and signs of Japanese buying are also mounting. Ultimately, we prefer to see AUD closer to 0.9300 and AUD/JPY too and possibly through 90.00 before we can be happier a low is finally in place.”
In terms of the AU outright, domestic data continue to suggest that bonds should rally. Hence, in the medium-term we remain better buyers on dips - particularly as the market continues to factor in less than two additional RBA cuts - 25bp less than our expectation. Finally, the AU 3-10yr curve has consolidated over the past week and is currently trading within a 74-84bp range. In the week ahead, while we have a bias towards further curve steepening driven by global moves, we recommend keeping position size light.