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Apr 07 - 09:55 AM

AUD/USD: Not Buy The Rumor, Sell The News; USD/JPY: Overbought Short-Term - SocGen

By eFXdata  —  Apr 07 - 09:00 AM
Societe Generale Research discusses AUD/USD and USD/JPY near-term outlook.
 
"The RBA has run out of patience, but the market was already pricing in rate hikes and this morning AUD/USD is back where it was a week ago. Not so much buy the rumour, sell the news, as buy the rumour, buy the news and then do an impression of a souffle. The RBA’s pivot does matter however, because it’s probably a long-term (albeit involuntary) change in policy. The years of low inflation allowed the RBA to run monetary policy easy and keep the currency down. That may not be possible for a long time and the Australian dollar should trade a good bit higher as a result," SocGen notes. 
 
"By the same token, BOJ speakers appear to confirm that a weak yen is now desirable, grasping the opportunity afforded by a global rate-hiking cycle they can sit out. USD/JPY is overbought in the short term, but we think it’s got further to go. If current position-cutting gets AUD/JPY close to 90 and gets the RSI back down to less stretched levels, we’ll get (over) excited about it," SocGen adds. 
Source:
Société Générale Research/Market Commentary

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