Flash: Australia strategy profile – Westpac

FXstreet.com (Barcelona) - The Aussie is the whipping boy for USD bulls, with commodities struggling and domestic data leaving open RBA cut as soon as June.

According to Global FX Strategist Sean Callow at Westpac, “Specs should extend shorts, opening up a run towards 0.94 (into early June). Over the month we see the Fed remaining dovish, so look for 0.9800.

Regarding the AU Curve, “We expect it to continue it’s steepening trend this week. Look for an initial bear steepening to be followed by a bull steepener as the market re-focuses on RBA pricing following the CAPEX report.” Callow adds. Finally, the AU 3yr EFPs have found a base around 30bp. If they narrow on a revised RBA view we would recommend entering paid positions, targeting a move towards 40bp.