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E-MINI S&P (M2): Trend Needle Points South


EGB Supply For W/C May 23, 2022


Bear Cycle Still In Play


Starting The Week On A Firmer Note


W/C May 23, 2022

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AUSSIE: Westpac note that "the AUD is closing in on our mid '19 forecast of
$0.70 at a much faster pace than we had envisaged. Recall that the key arguments
we have used throughout '18 to signal a significant fall in AUD from its peak in
Jan '18 of $0.81. Fears of a global trade war & general contagion through
emerging markets seem to be dictating this current development. We would argue
that these two factors will prove to be largely transient in terms of
implications for the AUD. Accordingly we are slightly lowering our end '18
forecast from $0.73 to $0.72 & exp. the final adjustment in the profile to $0.70
to play out through H119. However we are not sharply lowering our target low
point in AUD - at this stage recent movements look to be an overreaction to
fears that will not be franked. In that regard we point to the outperformance of
Australia's basket of commodity export prices. Export prices are running well
ahead of the normal relationship with the AUD. That is, on the basis of the
export price basket, the Australian dollar looks under-valued. On the other hand
there is a looser relationship between the AUD/USD and the AU/US interest rate
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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