6 reasons why AUD/USD long is the top trade for

The Australian dollar remains pressured in 2015 but has managed to avoid the 0.80 level so far. With a local and Chinese slowdown, bears  seem to be in control.

However, the team at Nordea has a different opinion and explains why the fate of AUD/USD could be very positive in 2015:

Here is their view, courtesy of eFXnews:

Nordea Markets is out with its FX trade recommendation for 2015 where buying AUD/USD is on the top of its list. The follwoing is Nordea’s rationle behind this call.

“¢ Rebalancing. Over the past 3 years imports have contracted with moderating consumption, while export contribution to GDP growth has increased. The current account has narrowed to just “3% now vs “7%/GDP in 2008.

“¢ Labour market. Whie inflation has softened in line with global trends, capacity utilization has likely bottomed, credit has picked up, and most forward looking indicators suggest improvement in the labour market in 2015.

“¢ Monetary policy. The Market is pricing in most interest rate cuts from RBA among G10 currencies (40bps within 1Y), which is not to materialize.

“¢ China housing. China, Australia’s key export destination, is set to recover: in particular the housing market will be cyclically helped by the policy easing and government measures over the past few quarters.

“¢ Base metals. The base metals, in particular iron ore, which dropped last year, will likely positively respond to recovery in China’s housing market, thus boosting Australia’s terms of trade.

“¢ Positioning. The Market is extremely short commodity currencies, and AUD in particular.

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