AUD: Markets Underestimating AUD Upside; Positioning Points To A Rally Coming Month – CIBC

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The Australian dollar wobbled in a week that saw ups and down for the mood around risk currencies. What’s next?

Here is their view, courtesy of eFXdata:

CIBC Research discusses AUD outlook and flags a scope for rally over the coming months.

We’re still maintaining our optimistic outlook on the AUD over the next 12 months. Yes, we understand that there are concerns related to the Chinese economy and that domestic wages are still far from levels that would worry the RBA about policy being too loose.

Additionally, credit conditions have tightened, causing private sector credit growth to slow. Still, the market has already priced out the RBA until at least next autumn. Additionally, for all the headlines on trade and a slowing Chinese economy, implied demand for iron ore is still at reasonable levels. The RBA has taken pains to point out that it views wages as having ‘troughed’ already while domestic growth is expected to be above 3% for both 2018 and 2019.

Markets are extremely short AUD in the proxies that we use. Crowded positions should beget an AUD rally over the coming months with Q3 CPI (October 30th), Wage prices (November 13th) and Q3 GDP (December 4th) among the key risk events to monitor,” CIBC argues.

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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 the 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.