Forex Flash: Waiting to sell the Aussie - Nomura
Forex pairs in this Article »
AUD/USD
FXstreet.com (Barcelona) - The last Q2 data (released early September) showed +AUD1bn inflow in actual FX flows (the worst since Q1 2010), with expectations for the Q3 data, when released in early December, to recover to around +AUD7bn, although by the time that Q3 data are released "they will be ancient history as far as FX markets are concerned", according to FX Strategist Nomura Strategist Geoffrey Kendrick.
Mr. Kendrick notes: "Our expectation in Q4 is that we will see a basic balance outflow of -AUD1bn, and as a result, we are on the alert for AUD selling opportunities. The reason we are waiting is because November (which has a specific bond redemption of AUD9bn, two-thirds of which is likely to go to non-residents) looks optimal from a flow perspective. It also allows time for markets to pare back some of the recent overly bearish attitude towards China."
From a level perspective, Geoffrey is looking at an opportunity to sell AUDUSD from above 1.04 via options due to low level of vol and skew. From a timing perspective, "we hope this level opportunity will coincide with the start of November" he says, adding that by waiting a few weeks, "will also give us access to the next RBA meeting (6 November) and the potential reignition of fiscal cliff concerns following the US Presidential election the same day" the Nomura Strategist concludes.
Mr. Kendrick notes: "Our expectation in Q4 is that we will see a basic balance outflow of -AUD1bn, and as a result, we are on the alert for AUD selling opportunities. The reason we are waiting is because November (which has a specific bond redemption of AUD9bn, two-thirds of which is likely to go to non-residents) looks optimal from a flow perspective. It also allows time for markets to pare back some of the recent overly bearish attitude towards China."
From a level perspective, Geoffrey is looking at an opportunity to sell AUDUSD from above 1.04 via options due to low level of vol and skew. From a timing perspective, "we hope this level opportunity will coincide with the start of November" he says, adding that by waiting a few weeks, "will also give us access to the next RBA meeting (6 November) and the potential reignition of fiscal cliff concerns following the US Presidential election the same day" the Nomura Strategist concludes.
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