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25 Feb 2014
Flash: Bias remains to sell the AUD - RBS
FXStreet (Bali) - Greg Gibbs, FX Strategist at RBS, offers his view on the AUD, noting the surprising resilience despite weak property and commodity indicators in China.
Key Quotes
"Our bias remains to sell AUD, but patience may be rewarded. We are moving into a heavy data period for Australia over the coming two weeks and further Chinese PMI data beginning this weekend."
"Australian capital expenditure on Thursday may be closely watched. It is difficult to predict but may show some further recovery in non-mining investment expectations in line with the recent recovery in business confidence. The AUD is showing a rare period of divergence from more negative news from China in the last week or so since the weaker HSBC/Markit flash PMI was released on 20 Feb. Emerging market and commodity currencies were generally firmer on Monday."
"The AUD shrugged off negative sentiment around the key property sector in China (a big user of Australian iron ore). A Chinese bank announced that it had temporarily stopped lending to property developers to take stock of existing assets and market conditions. And it said it was suspending mezzanine financing for developers for longer, perhaps through to the end of March. While a small share of overall financing, mezzanine finance is subordinated and important in securing other loans."
Key Quotes
"Our bias remains to sell AUD, but patience may be rewarded. We are moving into a heavy data period for Australia over the coming two weeks and further Chinese PMI data beginning this weekend."
"Australian capital expenditure on Thursday may be closely watched. It is difficult to predict but may show some further recovery in non-mining investment expectations in line with the recent recovery in business confidence. The AUD is showing a rare period of divergence from more negative news from China in the last week or so since the weaker HSBC/Markit flash PMI was released on 20 Feb. Emerging market and commodity currencies were generally firmer on Monday."
"The AUD shrugged off negative sentiment around the key property sector in China (a big user of Australian iron ore). A Chinese bank announced that it had temporarily stopped lending to property developers to take stock of existing assets and market conditions. And it said it was suspending mezzanine financing for developers for longer, perhaps through to the end of March. While a small share of overall financing, mezzanine finance is subordinated and important in securing other loans."