USD Trading Outlook (26-06-2014)

AUD/USD The chop fest in AUDUSD continued as a shocking revision to Q1 US GDP (-2.9%) and weaker Durable Goods Orders (-1%) hit the USD pretty much across the board and saved the AUD bulls (for now) from a collapse in Aussie interest rates. The break lower in US rates is only surpassed by those in Australia and sets up a conundrum for the Street where opinion seems evenly divided. While Oz is quickly becoming a less attractive carry play, the FX markets are still willing to give the benefit of doubt to the risk-on trade. AUD is stuck as a result. Chinese and Australian equity markets look heavy and the Europeans have all given back their post-ECB gains, closing below June 5 levels. Even though the US market held up today, yesterday’s key reversal in the S&P is still in play (barring new highs) and we feel that a risk-off trade…and a lower AUDUSD…can’t be dismissed.