Credit Suisse is still bearish AUD.
Last week’s soft surprise in core US CPI spurred a dramatic reaction in rates and FX markets. As a result, key pairs like EURUSD are challenging 200-day moving averages for the first time since the USD’s current bull trend became established in 2021. This price action comes a major relief not only for the bulk of the traditional investor space but also for central banks, who are now under somewhat less pressure to deliver aggressive rate hikes than before, even outside the US.
A range of constructive developments in China have also undermined another key factor behind USD strength. By finally igniting the pent-up potential energy of a China rebound narrative, Chinese policymakers have also disrupted, if not reversed, a key driver of greenback strength, especially relative to the Asian FX space.
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