Established in 1974
185,800 clients worldwide
Over 15,000 markets

Traders favour AUD longs ahead of the RBA

Australia is the place to be today with investors and traders keeping a keen eye on the RBA and its call on rates.

AUD
Source: Bloomberg

I think the pros and cons have been well documented by now, so the interesting bit is now more on positioning ahead of the meeting. While the swaps market is pointing to a 58% probability of a cut, 48% of our clients are short AUD/USD with the majority favouring longs at the moment.

There are two schools of thought. It could be a ‘sell the rumour and buy the fact approach’, which would see AUD/USD rally post the meeting. On the other hand, if the RBA disappoints in any way, it will lead to a reversal of magnitude and some traders will be looking to take advantage of that.

As a result, there are two plays here. Traders looking to ride the near-term momentum could target levels around $0.8000. In that region, sellers could be looking to come back in and I still feel in the medium term the AUD is a short.

Alternatively, if traders who are long at the moment got this trade wrong, then momentum plays on a break of recent lows could be the trade. Remember AUD/USD traded as low as $0.7720 and that’ll act as near-term support.

AUD/USD
Click to enlarge

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.

Find articles by analysts