AUD will take the lead from offshore events - ANZ

Research Team at ANZ, suggests that the AUD will largely take the lead from offshore events, and potentially the rates market.

Key Quotes

“As we note on the front page, AUD/JPY is a cross to watch if Japanese life investors support a new 30 year ACGB due this month.

Our view is that G4 rates have bottomed amid mounting signs that the ECB and BoJ are recognising that the costs of further easing outweigh the benefits. The latest hint of this is a report suggesting that the ECB has discussed the idea of tapering its bond purchases. If this view was to be echoed in the ECB Minutes, risks would be tilted towards rates rising further. The global long end sell-off in September suggests the AUD will underperform in a rising rate environment as the carry trade is unwound.

Otherwise, the focus will be on non-farm payrolls. We question the upside to Fed pricing and the USD in the event of a strong number given markets already put the chance of a December hike at approximately 60%. Hence, we would expect a larger move in the USD on a weak number. For the USD, the second Presidential debate will also be watched. However, with recent polling suggesting that Hillary Clinton has increased her lead, this will be less of a risk event than the first debate.”