AUD: Position Adjustment Could Extend Further S/T But Dips To Remain Supported – Nomura

Nomura FX Strategy Research notes that AUD has declined on the back of the FOMC-induced rise in the USD and comments from RBA Governor Lowe pointing to a lack of urgency to raise interest rates.

"We think this position adjustment in the AUD could run a little further in the near term, but fundamentally dips down towards 0.78-0.79 should remain supported. The domestic economic outlook is improving, the turn in the RBA cycle should continue to be priced, we do not think the rebound in the USD will last, and Australia’s balance of payments dynamics remain AUD positive," Nomura argues.

"AUD/NZD has moved against our expectations, with the market also re-pricing New Zealand election risks. We remain of the view that broader macroeconomic trends point to a higher AUD/NZD* in coming months," Nomura adds.

Source: Nomura Securities ResearchOriginal Article