AUD: 3 Bearish Factors Vs 3 Bullish Factors: What’s The Trade? – Nomura

The Australian dollar was hit but succeeded in bouncing from those levels. What’s next? The team at Nomura analyzes everything moving the Aussie:

Here is their view, courtesy of eFXnews:

Nomura FX Strategy Research outlines 3 AUD’s bearish factors that are in play against other 3 bullish factors.

On the bearish side: 1) Softer near-term growth momentum. 2) Lower level of Australian-centric commodity prices such as iron ore. 3) Lack of a positive monetary policy impulse.

On the bullish front: 1) The synchronised global recovery. 2) Australia’s improved balance of payments picture. 3) Relative stability in the long end Australian-US real yield spread.

Strategy-wise, Nomura recommends holding a bearish AUD bias on key crosses such as against the EUR and GBP.

EUR/AUD is trading circa 1.4745, and GBP/AUD circa 1.3760 as of writing.

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