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10 Jul 2013
Flash: Softer US data could make USD less appealing – Westpac
FXstreet.com (New York) - According to Jonathan Cavenagh at Westpac, “Our 4-week AUD/USD probability fell below 20% late last week.”
“At such depressed levels, the probability index is warning that much of bad news is now priced into the AUD outlook, at least from a near-term perspective.” Cavenagh adds. The last time the index fell to these levels was in late April/early May of this year.
The AUD recorded only a modest bounce after the index fell to these lows. However, the contrarian nature of the model worked much better in late December and in early June of year, when we saw a more concerted bounce in the currency after the probability model got to quite depressed levels. “In terms of the US data surprise index, if we do see a period of softer data momentum relative to expectations, this could take some of the heat out of the move higher in US yields and in turn make the USD look a little less appealing.”
“At such depressed levels, the probability index is warning that much of bad news is now priced into the AUD outlook, at least from a near-term perspective.” Cavenagh adds. The last time the index fell to these levels was in late April/early May of this year.
The AUD recorded only a modest bounce after the index fell to these lows. However, the contrarian nature of the model worked much better in late December and in early June of year, when we saw a more concerted bounce in the currency after the probability model got to quite depressed levels. “In terms of the US data surprise index, if we do see a period of softer data momentum relative to expectations, this could take some of the heat out of the move higher in US yields and in turn make the USD look a little less appealing.”