Home AUD: 4 Reasons For A Near-Term Correction – CIBC
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AUD: 4 Reasons For A Near-Term Correction – CIBC

The Australian dollar has been stuck in range for quite some time. The team at CIBC sees a correction coming:

Here is their view, courtesy of eFXnews:

CIBC World Markets Research argues that  investors should be cautious on  AUD as the currency looks likely heading towards a near-term correction on the ground of the following 4 reasons:

1-  Aussie dollar is generally the most correlated major with global growth assumptions and sentiment and as such it remains vulnerable as long as the current risk-off tone persists.

2-  Speculative long positions in AUD remain almost double the average of the past year, leaving room for an unwind to hit the currency.

3-  Iron ore prices have reversed their recent gains, opening the door to further unwinding in long speculative currency positions.

4-  The central bank also doesn’t appear to be in any rush to tighten policy, with spare labour market capacity and subdued wage pressures keeping the central bank on the sidelines until next year.

Add it all up, and it seems likely that the Aussie dollar could be in for a near-term correction.  However, as sentiment improves, the currency should begin making back those losses and more, over the back half of the year,” CIBC concludes.

AUD/USD is trading circa 0.7636 as of writing.

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Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.