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3 Oct 2013
Flash: Upside risks on AUD/USD - RBS
FXstreet.com (Barcelona) - On the back of a surprisingly high Australian services PMI, which jumped from 39.0 to 47.1 - still low by global standards though -, the AUD/USD is trading higher in Asia, having driven briefly above 0.9390/0.94 resistance, with the Chinese service sector PMI - high since March -, form 53.9 to 55.4 in September, helping provide bids to the Aussie too.
According to Greg Gibbs, FX Trading Strategist at RBS, while the Chinese data "does not necessarily imply demand for Australian commodities, it points to a more stable Chinese economy and better risk appetite."
Gibbs also touches on other fundamentals having an impact on the Aussie, noting "they are rising more sharply, confidence surveys are improved, the global PMI is at a 27 month high, the Fed has backed off the taper and the new Australian government is swinging from fiscal conservative in opposition to infrastructure builders in government." In view of Gibbs, all these factors combined suggest "to an RBA firmly on hold and the next move in rates, albeit months away, may be up not down."
Gibbs thinks that while concerns about where China is headed will remain short term, "I expect the Fed taper to be back on the table in three to six months, such that I have a lower forecast for the AUD next year." However, near term, "the risk is building for a rebound in AUD/USD as the market is steadily taking out its expectations of further rate cuts in Australia, which are now no longer fully pricing a further 25bp cut", Gibbs said.
According to Greg Gibbs, FX Trading Strategist at RBS, while the Chinese data "does not necessarily imply demand for Australian commodities, it points to a more stable Chinese economy and better risk appetite."
Gibbs also touches on other fundamentals having an impact on the Aussie, noting "they are rising more sharply, confidence surveys are improved, the global PMI is at a 27 month high, the Fed has backed off the taper and the new Australian government is swinging from fiscal conservative in opposition to infrastructure builders in government." In view of Gibbs, all these factors combined suggest "to an RBA firmly on hold and the next move in rates, albeit months away, may be up not down."
Gibbs thinks that while concerns about where China is headed will remain short term, "I expect the Fed taper to be back on the table in three to six months, such that I have a lower forecast for the AUD next year." However, near term, "the risk is building for a rebound in AUD/USD as the market is steadily taking out its expectations of further rate cuts in Australia, which are now no longer fully pricing a further 25bp cut", Gibbs said.