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10 Mar 2014
Flash: difficult trading in the AUD - RBS
FXStreet (Bali) - Greg Gibbs, FX Strategist at RBS, shares his view on the Australian Dollar outlook for the week ahead following the weaker-than-expected Chinese trade balance.
Key Quotes
"The weaker Chinese trade balance may be regarded as reflecting an already softer CNY (discouraging capital inflow that might be disguised as exports), but it could contribute to some further weakness in CNY ahead, especially since the market may remain nervous over where the authorities might guide the currency."
"The makes for difficult trading in the AUD. Through last week we warned that stronger Australian economic data suggesting the RBA may be forced to raise rates sooner than either it or the market currently thinks, perhaps before year end, might cause a squeeze higher in the AUD towards .92/93. "
"This week there are several key reports in Australia, including the employment report on Thursday that has been weaker than expected in recent months despite stable to firming leading indicators. As such we see a significant risk that it is much higher than expected this week. "
"However, the AUD will continue to be the main proxy for Chinese financial and economic risks, and the market will be watching closely developments in the metals markets in China this week after sudden and sharp weakness on Friday."
Key Quotes
"The weaker Chinese trade balance may be regarded as reflecting an already softer CNY (discouraging capital inflow that might be disguised as exports), but it could contribute to some further weakness in CNY ahead, especially since the market may remain nervous over where the authorities might guide the currency."
"The makes for difficult trading in the AUD. Through last week we warned that stronger Australian economic data suggesting the RBA may be forced to raise rates sooner than either it or the market currently thinks, perhaps before year end, might cause a squeeze higher in the AUD towards .92/93. "
"This week there are several key reports in Australia, including the employment report on Thursday that has been weaker than expected in recent months despite stable to firming leading indicators. As such we see a significant risk that it is much higher than expected this week. "
"However, the AUD will continue to be the main proxy for Chinese financial and economic risks, and the market will be watching closely developments in the metals markets in China this week after sudden and sharp weakness on Friday."