Despite good news from Australia and especially from China, AUD/USD found it hard to make gains.
What’s next? The team at BNP Paribas sees further weakness:
Here is their view, courtesy of eFXnews:
BNP Paribas believes the G10 commodity bloc currencies are entering a new phase of weakness.
“Specifically for the AUD, its decline against the USD and in tradeweighted terms since 2014 can be explained by the collapsing terms of trade and subsequent policy easing response by the Reserve Bank of Australia (RBA),” BNPP argues.
“Going forward AUDUSD weakness will instead be driven by a divergence in core inflation trends between the US and Australia and Fed policy tightening.
We believe this phase will be more gradual and moderate in scope. Consequently we recommend positioning via limited AUD downside/USD upside structures,” BNPP projects.
In line with this view, BNPP recommends a 3m AUD/USD put. with a 0.70 strike and 0.64 KO.
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