8 Jul 2013
Flash: AUD/USD rally capped ahead of July Fed testimony – Westpac
FXstreet.com (New York) - According to Global FX Strategist Sean Callow at Westpac, “Strong US payrolls punctured a AUD/USD attempted recovery and should cap rallies at least into Bernanke’s 17-18 July semi-annual testimony.”
Moreover, we look for squeezes to 0.9150/80 to be rebuffed, with scope for 0.89 multi-day. Performance on crosses should be more sensitive to August jobs data Thursday with -11bp priced for RBA in August.
In terms of Australian rates, the domestic bond market continues to be driven by global drivers, with the June NFP likely to result in the near term extension of the UST, (and therefore 10yr ACGB), bear trend. That said, there is little in the way of US data this week, meaning price drivers could revert to domestic fundamentals with the release of the June employment report on Thursday.
Finally, “there is a risk that the curve could spike higher if the UST sell-off continues as flattening trades have been abundant. Medium-term, the curve should flatten from its extreme levels, however the time is not yet ripe for the trade.” Callow adds.
Moreover, we look for squeezes to 0.9150/80 to be rebuffed, with scope for 0.89 multi-day. Performance on crosses should be more sensitive to August jobs data Thursday with -11bp priced for RBA in August.
In terms of Australian rates, the domestic bond market continues to be driven by global drivers, with the June NFP likely to result in the near term extension of the UST, (and therefore 10yr ACGB), bear trend. That said, there is little in the way of US data this week, meaning price drivers could revert to domestic fundamentals with the release of the June employment report on Thursday.
Finally, “there is a risk that the curve could spike higher if the UST sell-off continues as flattening trades have been abundant. Medium-term, the curve should flatten from its extreme levels, however the time is not yet ripe for the trade.” Callow adds.