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WestLB: Aussie will gain on carry trades
Analysts at WestLB note that Australian dollar performed surprisingly well despite the natural disasters that were tormenting the continent since the end of last year.
The specialists believe that even though RBA assistant governor Philip Lowe claimed that the country’s GDP could be about 1% lower this quarter, the total 2011 growth will still be almost 4.25% – more than in other developed nations.
WestLB underlines that such growth will be obtained while the Reserve bank of Australia’s benchmark rate is already at 4.75%, that’s 450 basis points above the Fed’s one, 425 bps above British rates and 375 bps above ECB’s rate. It’s also necessary to note that the Bank of Japan is unlikely to tighten its policy and lift the rates from current 0.1% level.
As a result, the analysts expect that Aussie is going to strengthen getting strong stimulus from the carry trades: investors will borrow in countries with lower interest rates investing in higher-yielding Australian assets.
BNP Paribas: EUR, GBP, AUD and CAD will grow
Currency strategists at BNP Paribas note that Brent crude is positively correlated with the value of euro, British pound, Australian dollar and Canadian dollar.
As the technical outlook for Brent is bullish, the specialists believe that the pair EUR/USD may reach 1.3950/1.4000, the pair GBP/USD can go up towards 1.6460, the pair AUD/USD will come back to resistance in the 1.0200/55 area and the pair USD/CAD may retest strong support at 0.9820/00.
RBC: USD/CAD is trapped between 0.98 and 1.00
Currency strategists at RBC Capital Markets note that the pair USD/CAD had peaked on Wednesday just below 0.9960 before falling back to last week's minimums in the 0.9817 area. The specialists think the greenback will find firm support at these levels. According to RBC, the range between 0.98 and 1.00 within which US dollar is trading versus its Canadian counterpart this year seems hard to break.