FXstreet.com (Barcelona) - Wespac FX client flows do not point any significant unwinding of AUD and NZD positions, says Richard Franulovich, senior currency strategist at Westpac; "If anything we have been steady buyers for our client base."

"Our database shows that as a group, Real Money, Hedge Fund/CTA’s and Sovereigns have bought AUD for 6 of the last 7 trading sessions and have bought NZD for an impressive 14 of the previous 15 trading sessions" Richard notes.

One wonders what then to make of the recent slide on the AUD and NZD of late, despite now both being on the mend.

Richard suspects that "some very lumpy and mercurial portfolio adjustments, beyond what we typically see, could be driving these currencies." As an example, he mentions "Japanese and Eurozone retail/high net worth flows possibly out of AUD and NZD and into EUR in the wake of the marked decline in Eurozone sovereign risk premia."

While, as Richard explains, "one could justifiably argue that the lack of upward impetus for AUD and NZD at a time of solid demand is a warning sign", constant demand for AUD and NZD has ultimately positive connotations in view of Mr. Franulovich, who sees it as "a confidence builder" because over the long run, "our flows are positively correlated with the price action" he says.