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13 Apr 2015
AUD shorts better than selling CAD – SG
FXStreet (Barcelona) - Kit Juckes of Societe Generale, comments that today’s Chinese data has added pressure on the Aussie, and with oil settling in a range and the Canadian jobs data looking strong, short AUD remains a better option than selling CAD at the current juncture.
Key Quotes
“Oil prices have settled into a range, and with Friday's Canadian jobs data coming in a little better than expected, I'm not going to get much help with the long USD/CAD view unless it comes from strong US data.”
“Wednesday's BOC decision looks like a sure-fire no-move. The 1.24-1.28 range probably holds and with iron ore prices still soft, there is more to be gained by selling AUD than CAD for now.”
“The very poor Chinese trade data overnight has added to the pressure on Aussie, though it has barely dented the stock market frenzy gripping China. There's an expectation of further easing (certainty) and of devaluation (not yet, at least in any meaningful sense).”
“The Chinese authorities want to re-balance their economy away from exports and towards domestic demand, but they won't want to see it slow this fast. But they are caught - easier domestic policy just makes domestic imbalances and debt levels worse, and it's not obvious a equity bubble would be the answer to debt and real estate bubbles.”
“On the other hand, no FGX devaluation that is less than 10% would achieve anything meaningful at all, and 20% is more likely to be needed. With 20% falls by the Euro and a 30% fall by the yen already keeping the 'currency wars' theme bubbling along nicely, a Chinese move may only be catch-up but would open multiple cans of worms. Still, I can't think of any good reason not to be short AUD......”
Key Quotes
“Oil prices have settled into a range, and with Friday's Canadian jobs data coming in a little better than expected, I'm not going to get much help with the long USD/CAD view unless it comes from strong US data.”
“Wednesday's BOC decision looks like a sure-fire no-move. The 1.24-1.28 range probably holds and with iron ore prices still soft, there is more to be gained by selling AUD than CAD for now.”
“The very poor Chinese trade data overnight has added to the pressure on Aussie, though it has barely dented the stock market frenzy gripping China. There's an expectation of further easing (certainty) and of devaluation (not yet, at least in any meaningful sense).”
“The Chinese authorities want to re-balance their economy away from exports and towards domestic demand, but they won't want to see it slow this fast. But they are caught - easier domestic policy just makes domestic imbalances and debt levels worse, and it's not obvious a equity bubble would be the answer to debt and real estate bubbles.”
“On the other hand, no FGX devaluation that is less than 10% would achieve anything meaningful at all, and 20% is more likely to be needed. With 20% falls by the Euro and a 30% fall by the yen already keeping the 'currency wars' theme bubbling along nicely, a Chinese move may only be catch-up but would open multiple cans of worms. Still, I can't think of any good reason not to be short AUD......”