AUD: Carry on in a low volatility environment amidst quiet week - ING

It’s a very quiet week in the Australian local calendar, though we do have a couple of RBA officials (Bullock and Debelle) to note, according to analysts at ING.

Key Quotes

“Governor Lowe's comment that we should be prepared for higher interest rates seems to have gone under the radar in a noisy Fed week; further talk along these lines would instil a steepening bias in the front-end of the Australian rate curve and keep AUD crosses supported.”

“The post-Fed shakeout means that AUD positioning is likely to be much cleaner, lending itself to a potential rebuild of long positions in a low-interest rate volatility and carry-friendly environment. Tail risks to this view remain heightened geopolitical tensions or a bond market sell-off driven by global central banks; the latter seems unlikely as it's becoming increasingly clear that embedded in asset prices is now the assumption that central banks will take the least market disruptive path when it comes to policy normalisation.”