USD tough to call; JPY looks attractive
For the near-term trade (next few weeks), it’s very hard to call the price action in AUD/USD. I believe we are in the midst of a US Dollar liquidation, which is positive for the Aussie and could potentially make a run for 78c. However, I am also expecting imminent and hard risk-off market move, which is generally quite negative for the Aussie dollar and could see it back to the 70c level. So at the moment, it’s quite tough. In the near-term I like the risk-off expression of being short in the AUD vs being long in JPY. A higher AUD would mean potential headwinds for the economy, but I think we’d need to get closer to 80c before the RBA gets worried – they were not that aggressive in talking down the currency at the last meeting. (Kay Van-Petersen, Asia Macro Strategist)
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