Forex Flash: Australia strategy profile – Westpac

FXstreet.com (Barcelona) - “Given the BoJ/Fed wall of money, the Aussie had a great chance last week to take out the January highs around 1.0600 but it is hard to ignore the slide in base and precious metals prices, increased pricing for RBA easing and the deflating China GDP report. This leaves AUD finding buyers with a 1.0300 handle but failing in the mid-1.05s.” writes Global FX Strategist Sean Callow at Westpac.

With regards to the AU outright, the upward trend in 3-year bond yields is now well and truly broken. With little domestic data due this week, expect AU bonds to trade of global sentiment, but we have a bias to buy into price dips rather than sell into rallies. Meanwhile, the AU curve 3-10 year curve flattener became a crowded trade last week as evident by its tendency to steepen in both bull and bear markets. According to Callow, “In the near term, expect the old 50- 63bp range to remain in play.”