26 May 2015
AUD/USD: Downside scope on better US data – NAB
FXStreet (Barcelona) - According to FX Strategists at National Australia Bank, AUD/USD risks unwinding of short positions, but a rebound in US data ahead might fuel further weakness in the pair.
Key Quotes
“The AUD has brushed off the 50bp of easing from the RBA this year. Given this, we are still paying attention to the local data and events, and they will matter over time, but the day to day is having less “bang for buck” than usual. What we have seen over the last week, and it doesn’t always have a one to one relationship, but there is a relationship – is a decline in the iron ore price and a lacklustre Chinese manufacturing read. That should leave the sentiment for AUD negative, in the absence of other factors.“
“We are exiting a relatively quiet period for local data but the coming weeks should be busy. That may not knock the AUD out of its rut – the US or Europe might have to do that – but it will allow sentiment to focus more on the underlying and relative performance of the AUD.”
“The RBA is not expected to move policy, but that should allow them to re-introduce a bias in their statement. They are unlikely to be pleased with the level of the currency; although that is nothing new.”
“As we head into the Q1 GDP data, capital expenditure is particularly important in gauging the non-mining investment situation. Non-mining investment has been the biggest concern in the outlook for Australia’s economic growth.”
“What remains a risk is the unwinding of short AUD positions; if the US data improves, volatility picks up or domestic data disappoints, then there is renewed scope to the down rather than upside in a better USD environment.”
Key Quotes
“The AUD has brushed off the 50bp of easing from the RBA this year. Given this, we are still paying attention to the local data and events, and they will matter over time, but the day to day is having less “bang for buck” than usual. What we have seen over the last week, and it doesn’t always have a one to one relationship, but there is a relationship – is a decline in the iron ore price and a lacklustre Chinese manufacturing read. That should leave the sentiment for AUD negative, in the absence of other factors.“
“We are exiting a relatively quiet period for local data but the coming weeks should be busy. That may not knock the AUD out of its rut – the US or Europe might have to do that – but it will allow sentiment to focus more on the underlying and relative performance of the AUD.”
“The RBA is not expected to move policy, but that should allow them to re-introduce a bias in their statement. They are unlikely to be pleased with the level of the currency; although that is nothing new.”
“As we head into the Q1 GDP data, capital expenditure is particularly important in gauging the non-mining investment situation. Non-mining investment has been the biggest concern in the outlook for Australia’s economic growth.”
“What remains a risk is the unwinding of short AUD positions; if the US data improves, volatility picks up or domestic data disappoints, then there is renewed scope to the down rather than upside in a better USD environment.”