Societe Generale FX Strategy Research notes that the RBA inaction has taken AUD down on no hint of visible hawkishness.
“AUD/USD is in its range, while the long-term bottom, in-out pattern is intact. Given there’s a yield pick up to all but one of the other g10 currencies, given strong Chinese PMIs, better commodity prices and a slowly improving economic outlook, the fact that the turn higher in the currency and the turn tighter in monetary policy will both happen at a glacial pace doesn’t really matter,” SocGen argues.
“Carry looks after the pace of move and AUD/JPY bulls are likely to use the dip to buy,” SocGen adds.
Source: Societe Generale Cross Asset Research
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