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8 Apr 2013
Forex Flash: Australia strategy profile – Westpac
FXstreet.com (Barcelona) - For the AUD/USD, local data this week will be critical. What will the monthly employment lottery bring us for March? Anything more than -5 would be good; anything less than -20 bad. According to Global FX Strategist Sean Callow at Westpac, “we see the AUD/USD down to 1.0250, however the BoJ/ Fed QE should support dips.
With regards to the AU outright, we view last week’s BoJ announcement as a game changer. Already we have seen a number of key resistance levels break in global bond markets - 1.70% in 10-year UST, 3.30% in 10-year ACGB and the upward trend channel in AU 3-year yields appears to have broken. “We would not recommend fighting this move – dips are an opportunity to add to longs.” he adds.
Finally, “We would expect any yield enhancement grab resulting from exceptionally low global yields to find its way into Australia. With these flows likely to occur at the longer end of the AU curve, we think the 3-10yr curve can continue to flatten.” Callow notes.
With regards to the AU outright, we view last week’s BoJ announcement as a game changer. Already we have seen a number of key resistance levels break in global bond markets - 1.70% in 10-year UST, 3.30% in 10-year ACGB and the upward trend channel in AU 3-year yields appears to have broken. “We would not recommend fighting this move – dips are an opportunity to add to longs.” he adds.
Finally, “We would expect any yield enhancement grab resulting from exceptionally low global yields to find its way into Australia. With these flows likely to occur at the longer end of the AU curve, we think the 3-10yr curve can continue to flatten.” Callow notes.