9 Jul 2013
Flash: AUD/USD, bounce to 0.9250/70 not out of question - Westpac
FXstreet.com (Barcelona) - At such depressed levels, in view of Jonathan Cavenagh, FX Strategist at Westpac, the Bank's probability index is alerting that much of the negative news are now priced into the AUD, at least from a near term perspective.
According to Cavenagh: "In the context of the current episode, besides the probability model being at very depressed levels we would also note that CFTC data shows record short positioning in the AUD and our US data surprise index appears to be rolling over. In terms of the US data surprise index, if we do see a period of softer data momentum relative to expectations, this could take some of the heat out of the move higher in US yields and in turn make the USD look a little less appealing.
Cavenagh adds "sentiment only needs to improve modestly to drive a further rebound in our probability index, which in turn could create a more positive back drop for the AUD, or at least drive more of a squeeze in short positions." The Strategist thinks that "under this scenario a bounce in the currency up to the 0.9250/70 region is not out of the question."
According to Cavenagh: "In the context of the current episode, besides the probability model being at very depressed levels we would also note that CFTC data shows record short positioning in the AUD and our US data surprise index appears to be rolling over. In terms of the US data surprise index, if we do see a period of softer data momentum relative to expectations, this could take some of the heat out of the move higher in US yields and in turn make the USD look a little less appealing.
Cavenagh adds "sentiment only needs to improve modestly to drive a further rebound in our probability index, which in turn could create a more positive back drop for the AUD, or at least drive more of a squeeze in short positions." The Strategist thinks that "under this scenario a bounce in the currency up to the 0.9250/70 region is not out of the question."