Credit Agricole CIB FX Strategy Research expects next week’s RBA policy meeting to reaffirm the central bank’s neutral stance, noticing that the RBA has so far resisted calls to join the group of G10 central banks that have moved closer to policy normalization recently.
“The outcome could trigger some profit taking of AUD-longs in the market and boost short-term FX volatility in key AUD-crosses,” CACIB argues.
On next week BoE policy meeting, CACIB doesn’t expect any policy changes from the BoE and suspects that support for a rate hike at the MPC has waned after the departure of Kirstin Forbes in June.
“This much could trigger some renewed GBP weakness and boost the short-term volatility of sterling-crosses,” CACIB adds.
Finally, CACIB notes that the USD’s recent downtrend remains the key theme in the FX markets and price swings around the trend will remain the key source of FX volatility.
“Next week’s US data (non-farm payrolls and ISM) could offer some support for USD but the releases may fail to ease the pervasive bearishness of the FX investors,” CACIB argues.
Source: Credit Agricole CIB Research
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