Weekly Outlook for Aud

Weekly Outlook for Aud


Quotes from Barclays Capital:
-Comments from RBA Governor Stevens that the Australian economy is "remarkably good" suggested that a near term policy rate cut is unlikely unless the economy weakens or the tail risk for the euro area reasserts itself. Recent Australian data has been strong and while Draghi's remarks disappointed a market with high expectations, near term action from the ECB looks increasingly likely.
-Our fixed income colleagues expect the Australian policy rate to remain unchanged at 3.5% this year. While the market also expects rates to remain on hold at this meeting, it continues to price in some loosening by year end. This suggests some short term upside for the AUD as the market responds to the RBA's outlook and forward guidance in its accompanying statement. If so, we recommend using this as an opportunity to go short AUD/USD and AUD/NZD.
-Our 1 month forecasts remain at 1.01 and 1.28 respectively due to the downside risks related to global risk aversion and declines in Australian commodity prices. Employment data in Australia and New Zealand are a further source of volatility for the AUD/NZD cross.


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