Australian Dollar: Limited upside and bearish crosses – TD Securities
TD Securities’ Prashant Newnaha and Howard Du note the Australian Dollar (AUD) has delivered its strongest year-to-date performance in 15 years but now sees constrained upside.

TD Securities’ Prashant Newnaha and Howard Du note the Australian Dollar (AUD) has delivered its strongest year-to-date performance in 15 years but now sees constrained upside. They prefer expressing a bearish AUD stance via lower AUD/CAD, citing stronger Canadian data, and maintains a short-dated AUD/NZD fly as weak Australian data and hawkish Reserve Bank of New Zealand (RBNZ) guidance cap AUD/NZD gains.

Bearish AUD views via CAD and NZD

"The AUD has had its best year-to-date performance in 15 years, but we see more limited AUD upside for rest of the year."

"Slew of weak AU data releases in May has already pushed AUD/USD down from 0.72 to 0.70."

"We see limited AUD upside for rest of the year and prefer to express bearish AUD views via lower AUD/CAD on diverging data."

"In the near-term, we like to express bearish AUD view via lower AUD/CAD."

"Elsewhere on AUD-crosses, we continue to hold short-dated 1.18/1.2050/1.23 AUD/NZD fly as weak AU data and hawkish RBNZ guidance has likely buckled the year-to-date AUD/NZD uptrend."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

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