AUD/USD: We have probably seen the highs for a while - SocGen

Kit Juckes, Research Analyst at Societe Generale, suggests that a surprisingly low quarterly CPI print in Australia (1.3% y/y vs exp 1.7%, trimmed mean 1.7% vs 2./1% exp) ) has triggered a sharp swing in sentiment towards the AUD, which down 1.7% overnight.

Key Quotes

“This time yesterday, Bloomberg’s calculation of the probability of a cut on 3 May was at 16%. This morning, it’s up to just over 50%. We don’t have much more data between now and then, with just PPI, private sector credit, commodity prices and building approvals data due, but even if the RBA don’t do anything next week, expectations that there’s room to cut again will remain. Today’s move is untradeable, but the FX market is, if anything, lagging the move in rates and we have probably now seen the highs for AUD/USD for a while.”