AUD rebound approaching end as RBA rate cut expectations reincarnated – BNP

By FXStreet FXStreet (Delhi) – Research Team at BNP Paribas, note that the Australia’s employment data disappointed market expectations with a contraction of 5.1k during September (consensus: +9.6k) which is likely to make AUD vulnerable as RBA rate cut expectations continue to build (a rate cut for Feb ’16 is now fully priced).

Key Quotes

“The impact on the AUD has been negative but relatively muted due to the current market environment – one of lower US yields and broad USD weakness – being supportive for the commodity currencies.”

“Furthermore, the volatility of Australia’s employment data limits the scope for this surprise to be a game changer for the AUD. To put the 14.7k miss into context, the standard deviation of surprises of this data over the past five years is 25k and the standard deviation of the revisions is 21k.”

“The risk-on environment in recent weeks has caused AUDUSD to have moved back towards its STEER™ after appearing oversold. From here this means that any rebound in US yields and the USD is likely to weigh negatively on AUDUSD.”
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Source:: FX Street