14 May 2014
AUD upside may be limited - RBS
FXStreet (Bali) - Greg Gibbs, FX Trading Strategist at RBS, believes that despite the bullish momentum in the AUD/USD, upside may be limited.
Key Quotes
"Easy major country policy and low US rates continue to fuel a recovery in emerging market assets and currencies. EUR softer as improvement in Russian assets reduces its safe-haven appeal, periphery spreads have tightened significantly and the market is seeing some reason to fund risky bets out of EUR anticipating lower rates in the next month."
"Chinese activity continues to slow, rapidly for fixed asset investment, albeit from still high levels, posing downside risks for iron ore prices and the AUD. The Australian government tightens the fiscal screws a bit more, keeping the RBA firmly on hold as far as the eye can see, with a risk that it switches back to an easing bias if the AUD rises much further. As such, upside may be limited, especially if US inflation and housing data begin to print more strongly."
Key Quotes
"Easy major country policy and low US rates continue to fuel a recovery in emerging market assets and currencies. EUR softer as improvement in Russian assets reduces its safe-haven appeal, periphery spreads have tightened significantly and the market is seeing some reason to fund risky bets out of EUR anticipating lower rates in the next month."
"Chinese activity continues to slow, rapidly for fixed asset investment, albeit from still high levels, posing downside risks for iron ore prices and the AUD. The Australian government tightens the fiscal screws a bit more, keeping the RBA firmly on hold as far as the eye can see, with a risk that it switches back to an easing bias if the AUD rises much further. As such, upside may be limited, especially if US inflation and housing data begin to print more strongly."