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5 Jul 2013
Flash: CAD, AUD increasingly vulnerable vs USD - TDS
FXstreet.com (Barcelona) - The commodity bloc - CAD and AUD manily - look increasingly exposed to further downside even factoring for recent weakness, says Eric Green, Global Head of Research for Rates and Foreign Exchange at TDS.
In view of Green, "Less QE means more volatility and coupled with narrowing interest rate spreads would suggest carry trades (think AUD and CAD) may be less appealing on a vol-adjusted basis."
Green is inclined to underline fundamental issues as the basis by which his views are indisputably bearish: "The boom in commodity price inflation that fuelled growth in Brazil, Canada, and Australia will not be revisited anytime soon." In the case of AUD, Green says "growth risks are likely tilted to the downside given sizeable surpluses with China look increasingly tenuous on growth issues, and in the case of Japan increasingly tenuous on currency issues." Green expects the AUD/USD at 0.88 USD by 2014.
In view of Green, "Less QE means more volatility and coupled with narrowing interest rate spreads would suggest carry trades (think AUD and CAD) may be less appealing on a vol-adjusted basis."
Green is inclined to underline fundamental issues as the basis by which his views are indisputably bearish: "The boom in commodity price inflation that fuelled growth in Brazil, Canada, and Australia will not be revisited anytime soon." In the case of AUD, Green says "growth risks are likely tilted to the downside given sizeable surpluses with China look increasingly tenuous on growth issues, and in the case of Japan increasingly tenuous on currency issues." Green expects the AUD/USD at 0.88 USD by 2014.