AUD,NZD

RBA will cut by 25bps next week, maybe even 50bps

Australian rates are at 3% in a world where the ECB is considering negative rates and whilst US rates might rise, it probably won’t happen in this decade! Commodity prices are falling, China is consolidating and the AUD is way too high and killing important industries like tourism.

The RBA needs to cut rates and cut them fast and if they have any market nous, they should cut by 50bps next week, drive the AUD/USD back towards 1.0000.

  1. Hi Sean
    Good day, any view for GBP/AUD??
    It seen like pullback from 200 MA, and the condition seen like overbought
    thanks

  2. I don’t think rate cut is coming. 3% is fine for australia. may be 2.75 by end of the year but not now

  3. Hi Danny, getting timing right is very tricky indeed, that’s why I like having small short AUD position which I can manage easily and add when time is right.

  4. Agree Jack, certainly seems bit overbought in short-term. I don’t like selling this pair though, prefer to wait and buy dips back towards 14925ish

  5. Hi Sean,

    GM. What is the best level to go long for euraud? I think eurusd can go 1.2950 after that it will go up. AUD is in bear mode.. But now it is looking strong compare to euro. If I enter euraud long before rba rate decision, it is good or bad?

    Regards,
    JK

  6. Hi JK. If you are building medium term long position then its better to wait until after the event risk is over. The obvious entry level to look for is around 12630ish I’d say.

  7. Thanks sean… I am expecting minimum 100 pips profit.. I could miss the trade.. But Idont want to be a loser :). So I will wait for 1.2630

  8. Sean, what is the biggest cross for NZD in terms of trading volume? I am thinking if RBA cut 50bp, that could create spike lower in AUD/NZD which i would fancy fading. UBS seems confident of this cross going towards 1.15, but I am not sure I agree with such aggressive stance. At least not in the straight li e.

  9. Hi Kirill, I was being a bit overdramatic with the 50 bps mention, as there’s little chance of ueber-hawk Stevens taking that route but a very good source tells me that 25bps is v likely. I wouldn’t discount 115 in AUD/NZD. There are still some big structural trades out there and most if not all tend to be long of this cross. Many of big macro funds take very l/t positions in this one

  10. Thanx Sean. 25 is reasonably widely expected so I doubt big fireworks. I started to like that cross it behaves nicely (i guess that could be famous last words). 1.15 is cool by me, I am playing it small with intraday bias to get a bettr feel for it. and trying to think at which level I would want to become more aggressive on a long side. So far it seems bearish, but nothing last long in fx… Except for yen trends)))

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