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7 Oct 2013
Flash: AUD faces unemployment demons this week - RBS
FXstreet.com (Athens) - Greg Gibbs, FX Strategist at RBS notes that AUD faces its employment demons this week, but business confidence has strengthened.
Key Quotes
“The biggest concern for global risk appetite is the fiscal stand-off in the US. Republicans disappointed hopes that they might start to back down from their demands to re-open debate over Obamacare and other fiscal programs. However, instead they dug in deeper.”
“The risk of the unthinkable is increasing – that the US reaches a point where it cannot make interest payments. 17 October remains the supposed deadline. As it draws closer without signs of arbitration, the risk of a significant drop in global share prices is rising.”
“Perhaps the chatter around the G20 and IMF semi-annual gathering over the week will create some pressure on Congress to act. Unfortunately the rhetoric may only highlight the significance of a US government incapable of the simplest procedures to maintain US and global stability.”
“This spectacle suggests it is foolhardy to bet on high beta assets like AUD and EM currencies. Nevertheless, the signs of stability and modest recovery in the global economy, a Fed continuing to pursue its QE policies, and signs of improvement in business conditions in Australia suggest the AUD should be well supported, and may rise toward .97 if US fiscal problems are resolved or rolled forward for a few months.”
Key Quotes
“The biggest concern for global risk appetite is the fiscal stand-off in the US. Republicans disappointed hopes that they might start to back down from their demands to re-open debate over Obamacare and other fiscal programs. However, instead they dug in deeper.”
“The risk of the unthinkable is increasing – that the US reaches a point where it cannot make interest payments. 17 October remains the supposed deadline. As it draws closer without signs of arbitration, the risk of a significant drop in global share prices is rising.”
“Perhaps the chatter around the G20 and IMF semi-annual gathering over the week will create some pressure on Congress to act. Unfortunately the rhetoric may only highlight the significance of a US government incapable of the simplest procedures to maintain US and global stability.”
“This spectacle suggests it is foolhardy to bet on high beta assets like AUD and EM currencies. Nevertheless, the signs of stability and modest recovery in the global economy, a Fed continuing to pursue its QE policies, and signs of improvement in business conditions in Australia suggest the AUD should be well supported, and may rise toward .97 if US fiscal problems are resolved or rolled forward for a few months.”