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Forex Flash: The AUD/USD is not particularly ‘expensive’ - NAB

FXstreet.com (Barcelona) - The Aussie finished the day sharply lower, down 86 pips at 1.0279. Economic data out of the US again missed estimates, with the ISM Manufacturing PMI 50.7 actual vs. 50.9 forecast. Many are starting to question what the appropriate value is for AUD/USD should this trend of economic weakness continue.

According to analysts at NAB Global Markets, “Our new valuation model suggests the current set of short-term AUD/USD fundamentals’ is equivalent to a short-term ‘fair-value’ range of 0.9730 – 1.0530. In other words, the current spot rate is within one standard deviation of ‘fair value’ and as such should not be regarded asparticularly expensive.”

Furthemore they added, “Our current forecasts that show AUD/USD holding at or above parity through 2013 assume that none of these risk factors eventuate this year. Indeed, the implications of the current iteration of our shortterm fair value model are little different from previously – a decisive turn in the US dollar is likely to be required for a substantial decline in the AUD.”

Final HSBC China PMI at 50.4 vs 50.5

The final HSBC China manufacturing PMI came at 50.4 in April after the flash estimate stood at 50.5. The weak external demand weighed on the slight slip seen.
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Forex: AUD/USD continues to lose ground in Asia session

The AUD/USD continues to break lower during the Asia session, down another 22 pips at 1.0256. This after the pair finished down 86 pips the previous day, mainly due to lackluster economic data from both the US and Australia. Earlier in the session, HSBC China PMI came in at 50.4 actual vs. 50.5 forecast. Reaction to the print was minimal.
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