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Closing Our 1M AUD/USD Seagull‏

ByDanske Markets
Published 06/10/2013, 09:02 AM
Updated 05/14/2017, 06:45 AM
AUD/USD
0.03%

We are closing down our 1M AUD/USD seagull ahead of expiry for a 3.02% loss (spot reference 0.9435).

Downside momentum in the cross has proved stronger than we envisaged. Australian data deteriorated a little, but not significantly over the past month. Chinese economic releases have failed to present improvement, yet have not deteriorated enough to trigger new stimuli. Two cuts are now priced on the RBA in 12M time, and while we think these are indeed likely to materialize, we are still less certain that the cuts will come as early as the market currently projects. A 50/50 chance of a cut already in July is somewhat aggressive in our view. However, with the possibility of the Australian employment report due later this week showing negative job growth, we think the risk-reward for closing down the trade is now more appealing.

While we have been expecting longer-term AUD weakness for a while, we reckon that the near-term rebound we had been looking for may not materialise. We are looking to revise our AUD/USD profile lower: our current 12M target is 0.95 but we might have to move this closer to 0.90.

To Read the Entire Report Please Click on the pdf File Below.

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