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Apr 08 - 12:55 PM

ANZ: Mild USD Bearishness This Week with a Bullish Outlook on AUD/USD

By eFXdata  —  Apr 08 - 10:45 AM

Synopsis:

ANZ holds a cautious to bearish stance on the USD for the upcoming week, anticipating limited upside beyond the 105 level on the DXY. The bank highlights potential moderation in upcoming US payroll and CPI data as reasons for this outlook. With employment indicators showing signs of cooling and historical trends suggesting a possibility of softer inflation figures, there could be room for USD downside. The bank is particularly bullish on the AUD/USD pair in the near term, citing lack of significant local data and potential shifts in USD dynamics and Fed rate cut expectations as supportive factors.

Key Points:

  • USD Outlook: ANZ sees potential for USD weakness, noting the DXY's struggle to sustain levels above 105. This outlook is backed by expectations of moderate payroll data and possibly softer CPI figures in the US.
  • Employment and Inflation Data: Historical seasonality and recent indicators suggest upcoming US payroll and CPI data might not fuel significant USD strength. Particularly, a softer services sector could imply a milder inflation reading.
  • AUD/USD Potential: With a quiet week ahead for Australian data, AUD/USD might benefit from any shifts in USD sentiment or adjustments in expectations for Fed rate cuts, potentially offering near-term upside for the pair.

Conclusion:

ANZ adopts a cautious to slightly bearish view on the USD for the week, driven by the anticipation of moderate US economic data releases. The bank underscores the AUD/USD pair as a primary beneficiary in the near term, given its sensitivity to USD fluctuations and the broader market anticipation of Fed policy adjustments. This outlook suggests a strategic positioning for AUD/USD gains, contingent on the unfolding economic data and central bank signals in the coming days.

Source:
ANZ Research/Market Commentary

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