5 Feb 2014
Flash: AUD/USD may test 90c, doubt will sustain above - RBS
FXStreet (Bali) - According to Greg Gibbs, FX Strategist at RBS, 90 cents will be an important psychological AUD level, saying that while a retest may be possible, sustained moves higher will be a tough mission.
Key Quotes
"The AUD looks more stable, holding the recent lows despite the weaker EM and global equity markets, and firmer after the RBA took away the easing bias."
"The RBA signalled that the AUD was at levels it was more comfortable with. It said, "The exchange rate has declined further, which, if sustained, will assist in achieving balanced growth in the economy". Judging by RBA comments since November last year, it prefers the currency below 90 US cents. This might be regarded now as an important pivot zone for the AUD; for the market, Australian business and the RBA."
"The Australian rates market responded to the significant shift in RBA tone to price in rising rates by Nov-14, albeit with some risk that rates are still cut in nearer months, presumably on the risk of a China led global economic down-turn. The chart below shows the 2yr swap rate spreads, pointing to some further modest upside potential for the AUD/USD, while AUD/NZD appears more fairly priced."
Key Quotes
"The AUD looks more stable, holding the recent lows despite the weaker EM and global equity markets, and firmer after the RBA took away the easing bias."
"The RBA signalled that the AUD was at levels it was more comfortable with. It said, "The exchange rate has declined further, which, if sustained, will assist in achieving balanced growth in the economy". Judging by RBA comments since November last year, it prefers the currency below 90 US cents. This might be regarded now as an important pivot zone for the AUD; for the market, Australian business and the RBA."
"The Australian rates market responded to the significant shift in RBA tone to price in rising rates by Nov-14, albeit with some risk that rates are still cut in nearer months, presumably on the risk of a China led global economic down-turn. The chart below shows the 2yr swap rate spreads, pointing to some further modest upside potential for the AUD/USD, while AUD/NZD appears more fairly priced."