BNP give 5 reasons why the AUD remains vulnerable

BNP Paribas nominate key 5 reasons on why the AUD is vulnerable to moving lower

1- Since the end of June, Australia's basket of commodity prices has declined by approximately 5%, and this corresponded with a fall inBNPP's quant framework for AUD/USD to 0.68.

2- Although the AUD has weakened in July, BNPP argues that the RBA is likely to remain uncomfortable with the current level of the AUD against the backdrop of falling commodity prices.

3- BNPP thinks there is scope for the market to price in a greater probability of further RBA easing ahead of the 4 August monetary policy meeting if the AUD remains stable.

4- BNPP Positioning Analysis signals that there is further scope for FX investors to build AUD shorts if rates markets begin to price in more RBA easing.

5- A soft Q2 print with headline inflation rising to 1.5% y/y (consensus: 1.7%).

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