– Uncertainty ahead of Monday’s Italian election will keep USD support today
Uncertainty ahead of Monday’s Italian election outcome will likely see USD better supported today. In Asia, RBA Steven’s semi-annual testimony to the House of Representatives started off with an initial hawkish tone – sounded confident about the economic outlook; but later lamented that AUD is somewhat overvalued, although the current level does not warrant intervention. He also noted that it is fair to expect that easing is more likely than tightening. We note that AUD-crosses, in particular, the EURAUD is likely to influence AUDUSD’s trading. The market is currently long EURAUD, liquidation of these positions on the back of EUR weakness will act in favour of AUDUSD. Meanwhile, JPY will likely be sensitive to headlines coming from US President Obama’s meeting with a Japanese delegation including PM Abe and Vice Finance Minister Nakao (talking head of FX policy).
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BNP Paribas