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4 Oct 2013
AUD/USD remains resilient amidst a poor risk-off environment
FXstreet.com (Athens) – The AUD/USD has been trading heavily upwards since the kick off of the Asian trading season amidst both of a “risk-off” environment but also while we are ahead of a very light calendar day.
AUD/USD moving to the upper side; rumors say that RBA might hike rates earlier
The AUD/USD has been trading on the upper level since the Asian trading opening session amidst a totally empty data calendar day regarding both the Australia and the US, as the latter will not issue the Non-Farms Pay-Rolls on Friday (more likely to be released soon after the government reopens, which is not looking imminent). Therefore is the Aussie flying blind amidst of a totally “risk-averted” environment and ahead of a totally light calendar data? The careful investors should look behind the curtains, in order to find out.
The Aussie is not flying blind; its uptrend shift might be attributed to house bubble, fiscal spending
According to Westpac, there are signs that indicate the housing market in Australia is picking up, with the Bank's Economists noting "the last few months have seen a significant shift in Australia's housing markets with a surge in auction activity and signs of a quickening in price growth." Therefore in that case Australia might start worrying and do what its antipodean neighbor, RBNZ announced recently as of “it expects to raise rates by 2% between 2014 and 2016 to combat the rising prices in the housing market.” Therefore the first reason that the cross is upwards is that traders might have been priced in that RBA will also hike rates “sooner” than later”. What’s more, apart from housing bubble, there might be also another reason that RBA might move in such a hawkish move. Elaborating on, Gibbs, Strategist at RBS, notes: "the LNP - now in power - is attempting to turn the debate towards more government infrastructure spending, borrowing more, running a bigger budget deficit for longer. From a markets perspective, Gibs mentions that this " should mean the down-turn in the AUD and period of low interest rates may be less than otherwise." There is also an interesting survey confirming to a major or less extent the above; traders are not pricing in any further RBA interest rate cuts over the coming 12 months, according to data from Credit Suisse.
Technical Outlook on the AUD/USD
Emmanuel Ng of OCBC Bank, mentions that negative dollar vibes may continue to support the pair with the Australian Sep services index also improving significantly to 47.1 from 39.0 the previous month. We retain a buy dips posture for the pair in the interim with base building behavior still expected around current levels. Support is seen on dips towards 0.9285 area while 0.9435 should cap pending further cues.”
AUD/USD moving to the upper side; rumors say that RBA might hike rates earlier
The AUD/USD has been trading on the upper level since the Asian trading opening session amidst a totally empty data calendar day regarding both the Australia and the US, as the latter will not issue the Non-Farms Pay-Rolls on Friday (more likely to be released soon after the government reopens, which is not looking imminent). Therefore is the Aussie flying blind amidst of a totally “risk-averted” environment and ahead of a totally light calendar data? The careful investors should look behind the curtains, in order to find out.
The Aussie is not flying blind; its uptrend shift might be attributed to house bubble, fiscal spending
According to Westpac, there are signs that indicate the housing market in Australia is picking up, with the Bank's Economists noting "the last few months have seen a significant shift in Australia's housing markets with a surge in auction activity and signs of a quickening in price growth." Therefore in that case Australia might start worrying and do what its antipodean neighbor, RBNZ announced recently as of “it expects to raise rates by 2% between 2014 and 2016 to combat the rising prices in the housing market.” Therefore the first reason that the cross is upwards is that traders might have been priced in that RBA will also hike rates “sooner” than later”. What’s more, apart from housing bubble, there might be also another reason that RBA might move in such a hawkish move. Elaborating on, Gibbs, Strategist at RBS, notes: "the LNP - now in power - is attempting to turn the debate towards more government infrastructure spending, borrowing more, running a bigger budget deficit for longer. From a markets perspective, Gibs mentions that this " should mean the down-turn in the AUD and period of low interest rates may be less than otherwise." There is also an interesting survey confirming to a major or less extent the above; traders are not pricing in any further RBA interest rate cuts over the coming 12 months, according to data from Credit Suisse.
Technical Outlook on the AUD/USD
Emmanuel Ng of OCBC Bank, mentions that negative dollar vibes may continue to support the pair with the Australian Sep services index also improving significantly to 47.1 from 39.0 the previous month. We retain a buy dips posture for the pair in the interim with base building behavior still expected around current levels. Support is seen on dips towards 0.9285 area while 0.9435 should cap pending further cues.”