From the FXWW Chatroom – The RBA’s policy statement, released earlier this morning, was left very similar to the previous statement, disappointing some expectations that a more dovish tone could have been adopted given the rising risks and uncertainties stemming from China and the commodity market. On the exchange rate, the RBA continued to note that the AUD “is adjusting to the significant declines in key commodity prices.” The AUD is currently being driven by the resurgence in the global risk environment. Our metrics indicate against the backdrop the AUD could continue to perform in the very near-term – BNP Paribas STEER™ indicates that AUDUSD remains cheap vs its short-term fair value of 0.7299 while BNP Paribas Positioning Analysis indicates that there remains short positions held by the market . However, we would caution that the global headwinds which are now restraining Fed action also imply a challenging environment lies ahead for the commodity currencies. A worse-than-expected trade deficit from Australia, released overnight, highlights these fundamental concerns. As such, we would look to fade the risk-on rally and favour a basket trade long GBP and USD vs. AUD, NOK and CAD. Canadian trade numbers later today could also serve as a reminder of commodity bloc vulnerability. [BNPP]
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