Free Trial

(H3) More Stable After January Volatility


Futures Little Changed Overnight, Rinban Due


(H3) Edges to February Lows



Real-time Actionable Insight

Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.

Free Access

NAB On AUD/USD Short-Term Fair Value


NAB note that "we started Sep with AUD almost 0.02 'expensive' relative to the model valuation. This overvaluation persisted for the first 3 weeks or so of Sep, only reverting to firstly fairly valued then slightly 'cheap' when the US equity sell-off broadened out beyond the technology sector and the AUD's -ve correlation with risk aversion strongly reasserted - the AUD sell-off then going slightly beyond what the model justified. At the tail-end of the month, AUD undervaluation relative to the model became much more pronounced, fair value at month-end is close to 0.74. This is because in the model, some of the elements included in the interest rate term factor only come into play with a significant lag (6+ months). Thus, only now is the model fully capturing the impact of the sharp falls in US interest rates in late Feb & March in anticipation and then the reality of aggressive Fed easing measures in response to the pandemic, which of course went well beyond what occurred in Australia. The suggestion therefore is that we do not need to see further falls in US rates relative to Australian to justify higher AUD spot levels in coming months. Note too that if the RBA does act to further reduce policy target rates in coming months, but by no more than say 15bps, it will not make a big impact in terms of AUD model valuation (meaning less than a cent)."

MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

To read the full story

Why Subscribe to

MNI is the leading provider

of news and intelligence specifically for the Global Foreign Exchange and Fixed Income Markets, providing timely, relevant, and critical insight for market professionals and those who want to make informed investment decisions. We offer not simply news, but news analysis, linking breaking news to the effects on capital markets. Our exclusive information and intelligence moves markets.

Our credibility

for delivering mission-critical information has been built over three decades. The quality and experience of MNI's team of analysts and reporters across America, Asia and Europe truly sets us apart. Our Markets team includes former fixed-income specialists, currency traders, economists and strategists, who are able to combine expertise on macro economics, financial markets, and political risk to give a comprehensive and holistic insight on global markets.