Friday, July 29, 2011

Royal Bank of Scotland sell EUR/AUD and EUR/NZD

While the market’s attention was focused on the development of US debt debates, there’s a good chance to benefit from trading Australian and New Zealand’s dollars.

Strategists at Royal Bank of Scotland believe that both nations are likely to lift up the interest rates rather soon. The specialists note that there was a flow of encouraging economic data so far. That includes strong growth and confidence figures from New Zealand and higher than expected CPI in Australia. In addition, Aussie and kiwi will be driven by the demand for rising neighbouring Asian assets. The greenback, on the other hand, has little upward potential as there aren’t many positive factors to encourage it.

RBS also thinks that the problems in the euro area are going to escalate as the regions will be struggling to implement the second bailout for Greece. It will be very difficult for Europe to regain the market’s confidence as it may be seen from the rising Italian sovereign bonds. 

The bank advises investors to sell EUR/AUD at 1.3010 stopping above on a 2-day close above 1.3500 and targeting 1.2000 by the first quarter of 2012. RBS recommend as well going short on EUR/NZD at 1.6500 stopping above on a 2-day close above 1.7000 and targeting 1.5000 by the first quarter of next year.

weekly euraud 11-33

Chart. Weekly EUR/AUD

published by FBS Holdings © 2011