With US inflation pushing up bond yields, real rates, as well as what appears to be a more hawkish US Fed how should investors & traders play the USD/AUD
Our Macro Models point to real reate differentials being negative between the US & Australia yet the AUD has been resiliient
Negative real rate differentials coupled with Australia's accumulation of debt will put downward pressure on the USD/AUD pair.
Additionally, the RBA has commented "Increases in commodity prices have supported the Australian dollar over this period,
while a narrowing of interest rate differentials between government bonds in Australia and those in other economies have worked in the
other direction."
In this case, the RBA notes that the AUD is vulnerable against the USD due to negative interest rate differentials between the US & Austrialia.
Therefore, Quantamize highlights selling AUD & buying USD would be a favorable trade to a multi-asset portfolio or an FX trader.
For more insights check out our profile! And as always, feel free to leave any comments or questions.
Our Macro Models point to real reate differentials being negative between the US & Australia yet the AUD has been resiliient
Negative real rate differentials coupled with Australia's accumulation of debt will put downward pressure on the USD/AUD pair.
Additionally, the RBA has commented "Increases in commodity prices have supported the Australian dollar over this period,
while a narrowing of interest rate differentials between government bonds in Australia and those in other economies have worked in the
other direction."
In this case, the RBA notes that the AUD is vulnerable against the USD due to negative interest rate differentials between the US & Austrialia.
Therefore, Quantamize highlights selling AUD & buying USD would be a favorable trade to a multi-asset portfolio or an FX trader.
For more insights check out our profile! And as always, feel free to leave any comments or questions.