I think I’m probably the lone ranger on this trade, but I am very bullish.
The market is trying to find similarities with previous big risk-off events and is looking for a CNY proxy trade, but this in my biased opinion is a mistake.
The biggest drivers behind sharp FX moves are usually extreme positioning followed by hedging requirements. Neither of these are currently relevant for the AUD market. We are at very low levels against the USD in particular, and starting to build AUD/USD shorts at these levels is a critical mistake.
The market does indeed want to sell AUD at the moment, but wait for a week or two when it NEEDS to buy, that’s when we will get the sharp topside moves. I’m biding my time but the next big move in AUD/USD will be towards 80 cents, not below 65 cents.
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