That being said, “We expect the AUD, therefore, to trade with lower volatility and a more neutral volatility skew, than is historically normal. This means that currency moves will tend to be less rapid, and rallies will tend to occur with almost the same vigor as sell-offs.” he adds.
“Our work implies that the AUD is unlikely to weaken substantially against the USD until the FDI/investment pipeline turns sharply lower. At this stage this looks to be a mid to late 2013 story. This suggests playing any AUD vulnerabilities on the crosses; as has been our practice for some time.” Yetsenga notes.