§ AUD
swung from a low of 0.75 to levels above 0.81 before almost making a full
reversal only recently. The swings started at the start of Apr and the
volatility is unlikely to end soon. The latest statement from RBA is telling
– that its course of action in the next few months is data dependent. With
that, RBA has turned non-committal, almost neutral, setting the stage for
more volatility for the AUD.
§ 1Q
GDP surprised to the upside. With growth still reliant on the declining
mining sector, we are cautious about being too sanguine on the latest GDP
print. That underpins our bearish AUD view for the medium term. In the
meantime, higher iron ore prices and dovish RBNZ can lift AUD.
§ We
expect strong US employment numbers to keep AUD bulls capped at 0.7880 for
the rest of the week. Beyond the near-term, a weekly close above the 0.7850
on Fri could give AUD bulls more impetus towards the familiar 0.80. Into
the longer horizon, we expect dollar strength to dominate towards Aug-Sep
ahead of the Fed rate hike in Sep. That should pressure the AUD/USD towards
0.74, with the possibility of undershooting this figure before arriving at
0.78 as dollar bulls wane towards year-end.
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