Short EUR/AUD is still an attractive trade for the medium term – SocGen

Kit Juckes, Chief Global FX Strategist at Société Générale, looks at 2-year yield differentials and the Dollar against the AUD.  

AUD/USD looks too low, EUR/AUD looks like a sell

I don’t think the AUD is as sensitive as the Euro is to shorter-term rates. 

The rate differential has moved against the AUD in recent days for the same reason as it’s moved against the Euro. The RBA may have sounded marginally more hawkish/less dovish on Tuesday than some expected but not enough to change the picture. AUD does, however, look low on this basis. 

With an economy in much better shape than the Eurozone’s, and with the Chinese authorities stepping up efforts to revive their economy, short EUR/AUD is still an attractive trade for the medium term.