By eFXdata — Apr 05 - 11:00 AM
Societe Generale Research discusses AUD outlook in light of the RBA April policy decision.
"Down under, a small monetary policy pivot, thoroughly anticipated by a market which, a week ago, was already pricing between 175 and 200bp in rate hikes by the end of this year. This morning’s RBA meeting saw a reference to patience on monetary tightening removed, and the market has added 5 basis points to its end-2022 rate pricing. A small rate adjustment but a gain of over 1% for the Australian dollar, which is at its best level against the US dollar since last June and is comfortably 2022’s top G10 currency," SocGen notes.
"Rate hikes are expected and priced-in by the rates market, but as Australia shifts from an easy money, tighter fiscal policy regime, back to something more balanced (at least) we think the currency will go on rising. AUD/JPY isn’t an easy trade to get onto here, after a 12% move so far this year, but it has further to go. GBP/AUD and EUR/AUD are also good shorts," SocGen adds.
Société Générale Research/Market Commentary