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10 Sep 2013
Flash: AUD/USD, risk is high of a further squeeze up towards 0.9500 - RBS
FXstreet.com (Barcelona) - Upside risks for the AUD/USD in the near term look significant, notes Greb Gibbs, Strategist at RBS.
Key Quotes
"Chinese economic data has continued to recover since June, and steadily the bearish sentiment surrounding China is ebbing at least for now. Chinese equities are also recovering more strongly recently, lead by property sector shares in China."
"The yield differential for the AUD/USD has also improved since the recent lows just ahead of the RBA rate cut in early-August. With
less downward pressure from EM, the AUD is moving more in-line with the yield differential."
"The data flow should be shifting the RBA back from an easing bias to remain on hold for longer to see how the economy unfolds and
if it will continue to respond to low interest rates. Odds of a further rate cut have been ebbing, but around half a further 25bp cut is
still priced by Q1 next year."
"The combination of global growth and commodity sector improvement, stronger activity in China since mid-year, greater stability in
EM over the last week, better data in Australia recently suggesting the RBA stays on hold, and record short AUD positioning suggest
risk is high of a further squeeze up in the AUD towards .9500."
Key Quotes
"Chinese economic data has continued to recover since June, and steadily the bearish sentiment surrounding China is ebbing at least for now. Chinese equities are also recovering more strongly recently, lead by property sector shares in China."
"The yield differential for the AUD/USD has also improved since the recent lows just ahead of the RBA rate cut in early-August. With
less downward pressure from EM, the AUD is moving more in-line with the yield differential."
"The data flow should be shifting the RBA back from an easing bias to remain on hold for longer to see how the economy unfolds and
if it will continue to respond to low interest rates. Odds of a further rate cut have been ebbing, but around half a further 25bp cut is
still priced by Q1 next year."
"The combination of global growth and commodity sector improvement, stronger activity in China since mid-year, greater stability in
EM over the last week, better data in Australia recently suggesting the RBA stays on hold, and record short AUD positioning suggest
risk is high of a further squeeze up in the AUD towards .9500."