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12 Sep 2013
Flash: AUD/USD rally lacks much further upside – UBS
FXstreet.com (Lisbon) - In light of the RBNZ yesterday, the central bank now thinks that once the first hike is administered in Q2 next year, further hikes will follow in quick succession – this arguably catapults the RBNZ into pole position as the most hawkish G10 central bank out there, suggests Research Analyst Gareth Berry at UBS.
Key quotes
“It also contrasts starkly with the RBA's policy stance, which is likely to remain dovish. Fresh evidence for this appeared overnight too when
Australia's unemployment rate ticked higher again even though the participation rate unexpectedly fell.”
“We doubt the AUD/USD rebound over the past two weeks has much further to run. What is likely to be a dovish set of RBA minutes next week would likely reinforce suspicions that the central bank maintains a medium-term easing bias. Furthermore, if the FOMC announces a taper on Sep 18 as UBS Economics expects, the conditions would likely then be in place for AUDUSD to trade back below 0.90 again over time, and towards our 1m and 3m targets of 0.88.”
Key quotes
“It also contrasts starkly with the RBA's policy stance, which is likely to remain dovish. Fresh evidence for this appeared overnight too when
Australia's unemployment rate ticked higher again even though the participation rate unexpectedly fell.”
“We doubt the AUD/USD rebound over the past two weeks has much further to run. What is likely to be a dovish set of RBA minutes next week would likely reinforce suspicions that the central bank maintains a medium-term easing bias. Furthermore, if the FOMC announces a taper on Sep 18 as UBS Economics expects, the conditions would likely then be in place for AUDUSD to trade back below 0.90 again over time, and towards our 1m and 3m targets of 0.88.”