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28 Jan 2014
Flash: Aussie to have limited lasting support - RBS
FXstreet.com (Bali) - According to Greg Gibbs, FX Trading Strategist at RBS, the AUD should continue to trade as the risk proxy for China.
Key Quotes
"Commodity currencies are likely to remain weak this year because growth rotation towards stronger major economies, while the global growth outlook remains constrained, supports major currencies, or because weaker larger emerging countries have negative feedback to global growth and risk appetite. China remains a key factor as the largest contributor to global growth."
"Fears over financial stress fallout to growth in China have not materialised yet, but the market is likely to retain a large risk premium for this possibility. The AUD in particular is likely to trade as the risk proxy for China. Evidence that domestic activity indicators are stabilising in Australia is likely to have limited lasting support for the AUD. A weak AUD is likely to keep the RBA from further cutting rates."
Key Quotes
"Commodity currencies are likely to remain weak this year because growth rotation towards stronger major economies, while the global growth outlook remains constrained, supports major currencies, or because weaker larger emerging countries have negative feedback to global growth and risk appetite. China remains a key factor as the largest contributor to global growth."
"Fears over financial stress fallout to growth in China have not materialised yet, but the market is likely to retain a large risk premium for this possibility. The AUD in particular is likely to trade as the risk proxy for China. Evidence that domestic activity indicators are stabilising in Australia is likely to have limited lasting support for the AUD. A weak AUD is likely to keep the RBA from further cutting rates."