Forex Flash: Wait for pullbacks towards parity before adding AUD exposure - UBS
FXstreet.com (Córdoba) - The Reserve Bank of Australia kept policy rates unchanged at 3.5% on Tuesday, as widely expected, while it did not showed easing bias, stating that "with inflation expected to be consistent with the target and growth close to trend&the stance of monetary policy remains appropriate".
"AUD interest rate futures markets have substantially reduced their expectations of RBA rate cuts to around 55bps over the next 12 months", says the UBS analyst team. "Nevertheless, we prefer to wait for pullbacks towards parity before adding AUD exposure. We see a greater than 50% probability of Greece exiting the Eurozone over the next 12 months, which could seriously hurt AUDUSD. Also, our US economists do not expect the Fed to engage in outright quantitative easing, which puts a cap on AUDUSD upside potential".
"AUD interest rate futures markets have substantially reduced their expectations of RBA rate cuts to around 55bps over the next 12 months", says the UBS analyst team. "Nevertheless, we prefer to wait for pullbacks towards parity before adding AUD exposure. We see a greater than 50% probability of Greece exiting the Eurozone over the next 12 months, which could seriously hurt AUDUSD. Also, our US economists do not expect the Fed to engage in outright quantitative easing, which puts a cap on AUDUSD upside potential".
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