AUD: Domestic story argues against fresh shorts - Westpac
|According to Sean Callow, Research Analyst at Westpac, Australian domestic story argues against fresh AUD shorts with a 0.74 handle.
Key Quotes
“Last week’s Aussie rally to above 0.76 was fuelled by the strong March jobs data and Trump’s honesty on wanting a weaker US dollar. Much of this was unwound in recent sessions due to the jittery global mood: 5 month lows in USD/JPY are hard to ignore.”
“But these tensions have started to ease, with North Korea’s holidays featuring only a failed missile launch and the usual parades. Nothing has been resolved, but markets are likely to be more focused on European political risk this week.”
“The domestic story argues against fresh AUD shorts with a 0.74 handle. The narrative around CPI is likely to be mostly about the return to >2%, helping RBA OIS pricing edge back towards flat from recent 20% pricing for a 2017 rate cut. Iron ore’s slide is also likely to be overdone. Look for AUD/USD to find support in the mid-0.74s but capped ahead of 0.76.”
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