30 Jan 2015
Stay short Aussie, Kiwi vs Greenback - SocGen
FXStreet (Bali) - Societe Generale issued a trade idea to go short both AUD/USD and NZD/USD last week, noting that the US dollar trend has further to run.
Key Quotes
"We issued a Trade Idea to go short both AUD/USD and NZD/USD last week. We remain bullish the US dollar, and so selling the Aussie and kiwi dollars against the US dollar appeals to us. The dollar trend has further to run, and those who are concerned about EUR/USD having fallen too fast in too short a time should consider switching to AUD/USD and/or NZD/USD trade."
"The RBA had forecasted an acceleration in Australian inflation this year, with annual headline CPI inflation at 3% and trimmed mean CPI at 2.75% by end2015. Those forecasts will be marked down soon from a combination of tumbling crude oil prices and a weaker growth outlook. The likely shift in inflation towards the lower half of the 2-3% inflation target band will permit the RBA to shift to a more dovish bias, and drive the currency down further."
"The Australian dollar has fallen significantly over the past three years, but further weakness is likely. As we discussed in “The Carry Bias” note, the Antipoden currencies appear to have benefitted from a large rate spread premium over the past few years. In the AUD/USD's case, that spread premium is quickly approaching the 150bp threshold that could see an accelerated move to the downside."
Key Quotes
"We issued a Trade Idea to go short both AUD/USD and NZD/USD last week. We remain bullish the US dollar, and so selling the Aussie and kiwi dollars against the US dollar appeals to us. The dollar trend has further to run, and those who are concerned about EUR/USD having fallen too fast in too short a time should consider switching to AUD/USD and/or NZD/USD trade."
"The RBA had forecasted an acceleration in Australian inflation this year, with annual headline CPI inflation at 3% and trimmed mean CPI at 2.75% by end2015. Those forecasts will be marked down soon from a combination of tumbling crude oil prices and a weaker growth outlook. The likely shift in inflation towards the lower half of the 2-3% inflation target band will permit the RBA to shift to a more dovish bias, and drive the currency down further."
"The Australian dollar has fallen significantly over the past three years, but further weakness is likely. As we discussed in “The Carry Bias” note, the Antipoden currencies appear to have benefitted from a large rate spread premium over the past few years. In the AUD/USD's case, that spread premium is quickly approaching the 150bp threshold that could see an accelerated move to the downside."