EUR/AUD: Chasing shadows - Nomura

Peter Dragicevich, Research Analyst at Nomura explains that AUD price action following the positive surprise in the latest Australian labour market report underscores their cautious view.

Key Quotes

“The detail shows excess slack remains, which points to subdued wage and inflation pressures. Looking ahead, we remain below consensus for Q1 GDP (out on 7 June). By contrast, we hold a positive view on EUR as the ECB’s policy normalisation process should continue to see term premia rise. The narrowing between a measure of the ECB’s “shadow rate” and the RBA’s cash rate illustrates EUR/AUD’s directional bias. We continue to project a move up towards 1.53 by end-Q2.”