24 Jul 2013
Flash: AUD/USD, case for a correction towards 0.95 viable - RBS
FXstreet.com (Barcelona) - According to Greg Gibbs, FX Strategist at RBS, a soft inflation outcome in Australia just release earlier today, combined with the AUD ability to remain stable above 0.90, should see the RBA cut rates again in two weeks.
Key quotes
"It is possible that the AUD rises in the near term on a position squeeze. A few other commodity and emerging currencies have broken recent ranges to the strong side in a retracement of their falls over recent months and the USD is in retreat in recent weeks. Gold has risen solidly in recent sessions."
"The AUD is now pressuring the high side of its recent range. It has crept above a wedge resistance, suggesting a rise back towards to .95/96 is coming. .960 would be around the 38.2% retracement level of the move from the April high (1.058) to the July low (0.900).(See pdf for chart)."
"I prefer to emphasise the downside trend since the reasons for it to have fallen remain, and the possible squeeze higher feels like a corrective type move that may be a little too obvious. Nevertheless, I can see the case for a correction towards 0.95 on the back of some stabilization in Chinese commodities, softer US data recently, and acceptance that rates in the US are still a long way from being raised."
Key quotes
"It is possible that the AUD rises in the near term on a position squeeze. A few other commodity and emerging currencies have broken recent ranges to the strong side in a retracement of their falls over recent months and the USD is in retreat in recent weeks. Gold has risen solidly in recent sessions."
"The AUD is now pressuring the high side of its recent range. It has crept above a wedge resistance, suggesting a rise back towards to .95/96 is coming. .960 would be around the 38.2% retracement level of the move from the April high (1.058) to the July low (0.900).(See pdf for chart)."
"I prefer to emphasise the downside trend since the reasons for it to have fallen remain, and the possible squeeze higher feels like a corrective type move that may be a little too obvious. Nevertheless, I can see the case for a correction towards 0.95 on the back of some stabilization in Chinese commodities, softer US data recently, and acceptance that rates in the US are still a long way from being raised."