Value in markets, like beauty, is often in the eye of the beholder.
Consequently, traders and strategists often have different values for an asset like the Australian dollar.
This morning, ANZ currency strategist Daniel Been has warned of a potential fall in the AUD, with its rally built on shaky foundations.
Overall the rally AUD is becoming increasingly speculative as the shift in fundamentals is now well priced into the AUD. Any further strength in the AUD will be driven by either speculative flows, or by reserve recycling from regional central banks, and while this can persist, their foundations are tenuous.
The interesting thing about this view is that Been recommends (to his wholesale clients not this audience) the buying of a 3-month Australian dollar put option, with a strike price of 0.9050.
Of cause, these are nuances professional traders will understand. But in layman’s terms, this effectively means Been thinks the Australian dollar is likely to be trading below 0.9050 in just three months time.
That’s quiet an aggressive call.