18 Feb 2014
Flash: AUD/NZD potential upside ahead - Societe Generale
FXStreet (Barcelona) - Kit Juckes, Global Head of Currency Strategy at Societe Generale, recommends buying the AUD/NZD in the short-term after the recent PBoC measures.
Key Quotes
"The PBOC's decision to drain liquidity using repos, is a reminder that the tightening bias remains in place and the desire to curb credit growth remains intact. As such, this should be seen as a commitment to allow the on-going slow and steady slowdown of the Chinese economy to continue."
"The risks that this can't be done in a steady fashion are clear, but what is clearest of all is that the re-balancing of China's economy away from resource and credit intensive sectors has to go on and over time, will continue to act as a drag on China's main trading partners. Still today, with quiet markets and a 'risk-on' mood, AUD, CAD and NZD are all reasonably well supported. Longs in AUD/NZD are the best way to position short term, shorts in NZD preferred for now rather than in CAD or AUD."
Key Quotes
"The PBOC's decision to drain liquidity using repos, is a reminder that the tightening bias remains in place and the desire to curb credit growth remains intact. As such, this should be seen as a commitment to allow the on-going slow and steady slowdown of the Chinese economy to continue."
"The risks that this can't be done in a steady fashion are clear, but what is clearest of all is that the re-balancing of China's economy away from resource and credit intensive sectors has to go on and over time, will continue to act as a drag on China's main trading partners. Still today, with quiet markets and a 'risk-on' mood, AUD, CAD and NZD are all reasonably well supported. Longs in AUD/NZD are the best way to position short term, shorts in NZD preferred for now rather than in CAD or AUD."