AUD: Scope For A Rebound On Liquidity Relief; Still Like To Play It Via AUD/NZD Longs – Nordea

March 28, 2019 Off By admin-445

The Australian economy is doing OK but fears of a global recession are weighing. What’s next?
Here is their view, courtesy of eFXdata:

Nordea Research discusses AUD outlook and flags a scope of tactical rebound on a relief in liquidity. Nordea maintains promoting long AUD/NZD to express this view.

“The eagerly awaited announcement of the end-date to QT is now a reality, and hence we find it timely to look at how some of the most “sensible” G10 USD pairs price versus the new outlook for developments in USD excess liquidity.

AUD is the currency that would most obviously gain from a liquidity relief within G10, as i) positioning is super short in AUD, ii) Market pricing of RBA is very gloomy (yes, we acknowledge that the domestic Australian outlook is anything but impressive) and iii) AUD is most obviously linked to the credit cycle,” Nordea argues.

“We though opt to play such a potential for an AUD positive rebound against NZD still, as NZD prices higher relative to the liquidity outlook already,” Nordea adds.

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