4 Feb 2014
Flash: Short AUD bets are still deep in the money - BMO Capital Markets
FXStreet (Córdoba) - Stephen Gallo, European Head of Currency Strategy at BMO Capital Markets notes that the risk-off tone continued to dominate generally during the London session, although conditions were nowhere near ‘panic levels’.
Key Quotes
“Our barometer, USD/JPY, trades very soggy, but interest to bail out of USDJPY longs or enter new shorts appeared limited so far.”
“The AUD was firm, following the RBA, and long AUD will be one of our ‘star performers’ for the week if the ECB surprises ‘dovishly’ and North American employment data are downbeat. Short AUD bets are still deep in-the-money, even with today’s rally, so we will probably see shorts remain patient.”
“However, the bigger medium-term risk for the AUD now is that a move to 0.900-0.920 in AUDUSD forces aggressive AUD short covering on the crosses.”
Key Quotes
“Our barometer, USD/JPY, trades very soggy, but interest to bail out of USDJPY longs or enter new shorts appeared limited so far.”
“The AUD was firm, following the RBA, and long AUD will be one of our ‘star performers’ for the week if the ECB surprises ‘dovishly’ and North American employment data are downbeat. Short AUD bets are still deep in-the-money, even with today’s rally, so we will probably see shorts remain patient.”
“However, the bigger medium-term risk for the AUD now is that a move to 0.900-0.920 in AUDUSD forces aggressive AUD short covering on the crosses.”