Flash: Australia strategy profile – Westpac

FXstreet.com (Barcelona) - According to Global FX Strategist Sean Callow at Westpac, “A major recovery is very unlikely ahead of US payrolls but we look for at least interim stability on the oversold Aussie, with the RBA set to be on hold and GDP growth to be reasonable.”

“We ultimately look for 0.9530 to hold, with upside capped mid-0.9700s. On a one-month view we see the Fed remaining dovish, helping the AUD/USD back to 0.9800.” Callow adds. Moving the AU outright, unless the RBA delivers a surprise rate cut Tuesday it’s difficult to see a domestic driver of bullish outcomes this week.

In the medium-term, we remain better buyers on dips and target entry level for 3yr yields at 2.75%. Finally, “while we do not expect RBA actions to support a bull steepener, our analysis suggests that while the AUD/USD remains weak, and US 10yr yields are pressured, then bear steepening will remain the most likely AU curve outcome.” Callow warns.