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20 May 2013
Flash: AUD/USD comeback likely, though parity remains illusive – NAB
FXstreet.com (Barcelona) - Since 12 April 2013, the Australian Dollar has been the second worst performing currency in the entire world, beating only the war-torn Syrian Pound.
The break of the 1.0115-1.0625 range encouraged offshore real money and leveraged selling, which was not offset to any material degree by buying from corporates. Though investor sentiment has swung to be almost universally bearish on AUD, further weakness from here will require a stronger USD, perhaps encouraged by the prospect of the Federal Reserve ‘tapering’ QE as the economic outlook improves in the United States.
The latest US labor market and consumer confidence data are encouraging, though headwinds from fiscal policy may still weigh on economic activity through Q2. According to the NAB Research Team, “Near-term we could see a short squeeze up to the 0.9850-0.9920 area. Recovery to and beyond parity looks a much less likely prospect and we’d expect any rally to be met with substantial selling interest.”
The break of the 1.0115-1.0625 range encouraged offshore real money and leveraged selling, which was not offset to any material degree by buying from corporates. Though investor sentiment has swung to be almost universally bearish on AUD, further weakness from here will require a stronger USD, perhaps encouraged by the prospect of the Federal Reserve ‘tapering’ QE as the economic outlook improves in the United States.
The latest US labor market and consumer confidence data are encouraging, though headwinds from fiscal policy may still weigh on economic activity through Q2. According to the NAB Research Team, “Near-term we could see a short squeeze up to the 0.9850-0.9920 area. Recovery to and beyond parity looks a much less likely prospect and we’d expect any rally to be met with substantial selling interest.”