Nomura Research adopts a medium-term bullish bias on AUD and looks for opportunities to go long AUD/JPY.
"We think that medium-term support for AUD has built, and we expect to be more upbeat on AUD as we move through Q1 next year. We note that Q3 GDP handsomely beat expectations , the iron ore price has levelled out and recovered a little, and we expect to see a more hawkish RBA through the latter part of Q1 too. This week, the ABS also reported another large current account surplus in Q3, which helped deliver a positive basic balance," Nomura notes.
"We think the stage is set for a higher AUD as we move through 2022, and we may look for opportunities to go long AUD/JPY, but for the near term, caution prevails," Nomura adds.