Forex Flash: AUD/USD Don´t fight the Fed – Westpac
FXstreet.com (Barcelona) - The strategists at Westpac note that AUDUSD faced three hurdles this week. The RBA meeting, Q3 GDP and November Unemployment.
At the time of writing the team note that having navigated through this treacherous schedule, the pair had emerged some 50 pips higher, but regardless, that doesn't mean that it is plain sailing from this point onwards and it can be expected to find tough resistance at 1.0490/1.0520. However, it's now looking as though the potential negatives for AUD in coming weeks are risks rather than a sufficiently strong baseline scenario to knock AUDUSD as low as 1.02 by year end. They have previously had a 1.0600 target for March 2013 but it now seems that the dips en route will be more shallow.
They write, "Not that Australia's domestic economy is inspiring great confidence. The fall in the unemployment rate to 5.2% was an unexpected positive but with pronounced weakness in e.g. business surveys and job ads, it's entirely possible that the RBA will have a rather softer Dec report to hand when it next reviews policy on 5 Feb. The details of the Q3 GDP report were not inspiring, with consumers still very cautious (up just 0.3% q/q) and no sign of investment outside mining picking up the slack that the peak in mining will produce."
The economy seems to be growing at only around 2.5% annualise at the moment and the RBA statement was quite neutral, so the AUD bounce in response was probably just short covering by those punting on either a dovish statement or a surprise -50bps cut.
The team note that it is not as though AUD is impervious to Australia's sluggish economy, with the currency hitting lows against the Euro dating to the end of October. AUDNZD hit once month lows after a 'hawkish' RBNZ statement and AUD is no better than range bound on other major crosses. They finish by stating that, "We retain our short AUDCAD stance. But into early 2013, it is increasingly unappealing to be long USD versus almost anything."
At the time of writing the team note that having navigated through this treacherous schedule, the pair had emerged some 50 pips higher, but regardless, that doesn't mean that it is plain sailing from this point onwards and it can be expected to find tough resistance at 1.0490/1.0520. However, it's now looking as though the potential negatives for AUD in coming weeks are risks rather than a sufficiently strong baseline scenario to knock AUDUSD as low as 1.02 by year end. They have previously had a 1.0600 target for March 2013 but it now seems that the dips en route will be more shallow.
They write, "Not that Australia's domestic economy is inspiring great confidence. The fall in the unemployment rate to 5.2% was an unexpected positive but with pronounced weakness in e.g. business surveys and job ads, it's entirely possible that the RBA will have a rather softer Dec report to hand when it next reviews policy on 5 Feb. The details of the Q3 GDP report were not inspiring, with consumers still very cautious (up just 0.3% q/q) and no sign of investment outside mining picking up the slack that the peak in mining will produce."
The economy seems to be growing at only around 2.5% annualise at the moment and the RBA statement was quite neutral, so the AUD bounce in response was probably just short covering by those punting on either a dovish statement or a surprise -50bps cut.
The team note that it is not as though AUD is impervious to Australia's sluggish economy, with the currency hitting lows against the Euro dating to the end of October. AUDNZD hit once month lows after a 'hawkish' RBNZ statement and AUD is no better than range bound on other major crosses. They finish by stating that, "We retain our short AUDCAD stance. But into early 2013, it is increasingly unappealing to be long USD versus almost anything."
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