Selling AUD Or NZD Won't 'Bear Fruit' Just Yet - SocGen
The market legacy of this ‘business as usual’ start to the monthly data calendar was some violent end-of-the-week position-adjustment on Friday but a return to yield-hunting this morning. The chances of a September Fed rate hike are reduced, slightly but the market consensus is still that 1) the Fed will get round to moving before Christmas and 2) It doesn’t really matter because the pace of hikes will be too slow to materially disrupt capital flows.
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It’s the second of these that drives the money – out of G3 assets and into yield. What we have this morning are Treasury yields which are edging up and justify bearish bond positioning, but investor flows are anything in G10 with yield.
A weekly calendar that includes policy-setting meetings that are unlikely to see further easing (yet) from RBA or BOK, and Chinese FX reserves data that probably won’t show a significant fall, doesn’t suggest at first glance that shoring AUD or NZD will bear fruit just yet....
