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AUD weaker, but positioning is not bearish - TD Securities

FXStreet (Łódź) - Prashant Newnaha from TD Securities notes the recent drop in the AUD and believes that the downward move will continue in the upcoming months.

Key quotes

"This view is not driven by an expectations of the RBA lowering the cash rate, or even the stodgy fundamental that lower export prices leads to a lower currency, but merely because we expect the markets to raise the odds that the Fed will hike by mid-next year, strengthening the USD."

"A year ago now, when the 'taper tantrum' was in full flight, net positioning was – 60k or so contracts (August 2013) as investors piled into the USD."

"While this dramatic positioning may not be replicated by year end/early 2015, even a fraction of this shift in positioning can be expected to weigh heavily on the AUD and is behind our year-end target of $US0.90, independent of whether the RBA is dovish or not."

"Looking ahead, if futures and options positioning turn bearish, then there will only be downside risks for the AUD without the RBA having to do or say anything."

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