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StanChart See USD as Stronger Than Equities, Rates Modelling Would Suggest

USD
  • Standard Chartered write that AUD YTD underperformance stands out relative to its yield differential move, with the USD having been stronger than their equities and rates modelling would suggest.
  • In the near-term, they expect a reversion to the mean in USD strength - given the outperformance of the USD and the perverse USD strength against EUR and CAD relative to yield moves, they think there is a fair risk that markets could get some USD adjustment, unless US data come in so much on the strong side prompting a full-scale re-rating of rate cutting expectations.

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