Australian Dollar seen vulnerable after weak data – Societe Generale

Kit Juckes at Societe Generale highlights that rising global bond yields are pressuring leveraged housing markets such as Australia. Recent NAB business confidence and home loans data were notably weak. While AUD rates are still preferred over USD rates, he judges that AUD/USD has room to fall given the Australian Dollar’s strong performance earlier in the year.

Rates trade favoured over currency

"The rise in bond yields, however, is feeding through to leveraged housing markets, and Australia is certainly one of them."

"Yesterday’s NAB business confidence indicator took a sharp turn lower, and this morning’s home loans data were at least as disappointing."

"In the current market, I suspect that may still be a better trade than shorting AUD/USD, although the latter has room to fall given how well the Australian dollar has performed overall this year."