The tailwinds that propelled the Aussie dollar from the lows around 86 cents to the high this week of just under 93 cents are abating, according to the ANZ, which last night released a research note saying that the “AUD is primed for a turn”.
Currency strategist Daniel Been wrote that:
The rally from USD0.86 has been aggressive, but it has priced in US data disappointment, a re-rating of growth in Australia, and some expectations of a policy response from China. A shift in the momentum of any of these factors will drive a reversal in the AUD.
But he things a shift in sentiment might already be occurring noting that “the AUD failed to rally despite a neutral RBA Statement and more weak Chinese data fuelling further talk of policy easing there. This marked a shift from recent behaviour and could be a signal that most positive scenarios are now built into the AUD.”
He went so far as to recommend ANZ clients should actually sell Aussie dollars.
Sentiment is a big part of currency market trades and it just might have turned. The RBA will be happy if Been is right.
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