AUD: Don’t get carried away – ANZ

Daniel Been, Head of FX Strategy at ANZ, suggests that the strong, post-Brexit rally in the AUD has driven us to reassess our forecast trajectory.

Key Quotes

“While we continue to think that the fundamental grounds for a rally are not in place, market volatility has not provided the catalyst for weakness that we anticipated.

Observing the lack of contagion from the Brexit shock, together with indications that the Fed is not about to manufacture a sharp sell-off in long bonds, has led us to believe that we cannot identify near-term drivers of a significant depreciation.

As such, while we continue to think that the AUD will reach new lows in this cycle, we have pushed out the timing of the decline and expect the AUD to range-trade in the near term.

We still believe that the balance of risks is to the downside and that volatility looks too low. We recommend a medium-term option structure to capture these risks.”