Highlights overnight going to AUD with overshoots in the U-rate as expected. This number is going to trigger the RBA surprise hold that we have been tracking in this diagram:
Large hands spotted on the AUD bid last ear and will continue to do so as a lot more unwinding of positions needs to take place from those betting on FURTHER rate cuts. Tracking 0.692x in AUDUSD as a sensible target from the initial knee-jerk reaction.
The strategy for the flows from the AUD side in the chart have been dissected here in this diagram:
On the CAD side, Poloz caught me by surprise with a very dovish BoC. This was particularly surprising considering his pokerface at the fireside chat only two weeks ago! Focus now shifts onto whether this will be a “one off” cut…in my books the move in USDCAD should be contained by the 1.32 handle - the data (although below par) is not weak enough to justify a full blown cutting cycle. On the positioning side, long and medium term flows are still betting heavily long CAD so expect 1.32xx to provide a good opportunity to re-engage with a swing back towards 1.28xx later in the year as those longs from the recent rally begin to unwind.
Good luck all those in AUDCAD and holding for the long-term, this is going to the highs like a knife through butter. As usual, thanks for all the support with likes, comments, charts and etc !!
It's really appreciated !