The AUD has been stable of late, mainly due to the RBA keeping investors’ rate expectations stable. According to the central bank a period of stability for rates is anticipated while the AUD is still regarded to be high by historical standards.
Given stable rate expectations, we expect the AUD to become more driven by global risk sentiment. Concerning the ECB it will be about the central bank’s impact on global liquidity expectations.
When it comes to this week’s US labour data release, a material impact on US yields seems unlikely, unless employment improves considerably.
From a broader angle we stick to the notion that the AUD should be bought on dips, for instance against the USD and the JPY.
*CA maintains a long AUD/USD position from mid-January with a revised profit-stop at 0.8925, and a target at 0.9530.