GBPAUD TO 1.9600 TODAY?
Trading Plan
1. Baseline Scenario:
- Macro-Fundamental Bias: Neutral to Dovish. The RBA is expected to maintain a cautious stance on interest rates, with markets anticipating a quarter-point rate cut by May 2025 and rates ending 2025 at 3.85%. This expectation is based on the need for more progress in reducing core inflation to the 2-3% target range.
- Short Term Sentiment Bias: Bearish. The AUD is under pressure due to its role as a proxy for the Chinese yuan, influenced by US tariff risks and ongoing economic uncertainties in China. Additionally, Australia's current account deficit and weak export data contribute to the negative sentiment.
2. Risk Event Baseline:
- Market Expectations:
- Australian GDP (QoQ) Q3: Consensus at 0.5% (previous: 0.2%).
- Australian GDP (YoY) Q3: Consensus at 1.1% (previous: 1.0%).
- China Caixin Services PMI (Nov): Consensus at 52.5 (previous: 52.0).
3. Surprise Scenarios:
- Negative Surprise:
- Australian GDP: If GDP figures come in below expectations, it could exacerbate the bearish sentiment, leading to further AUD selling.
- China Caixin Services PMI: If the PMI is weaker than expected, it could further pressure the AUD due to its correlation with the Chinese economy.
1. Baseline Scenario:
- Macro-Fundamental Bias: Neutral to Dovish. The RBA is expected to maintain a cautious stance on interest rates, with markets anticipating a quarter-point rate cut by May 2025 and rates ending 2025 at 3.85%. This expectation is based on the need for more progress in reducing core inflation to the 2-3% target range.
- Short Term Sentiment Bias: Bearish. The AUD is under pressure due to its role as a proxy for the Chinese yuan, influenced by US tariff risks and ongoing economic uncertainties in China. Additionally, Australia's current account deficit and weak export data contribute to the negative sentiment.
2. Risk Event Baseline:
- Market Expectations:
- Australian GDP (QoQ) Q3: Consensus at 0.5% (previous: 0.2%).
- Australian GDP (YoY) Q3: Consensus at 1.1% (previous: 1.0%).
- China Caixin Services PMI (Nov): Consensus at 52.5 (previous: 52.0).
3. Surprise Scenarios:
- Negative Surprise:
- Australian GDP: If GDP figures come in below expectations, it could exacerbate the bearish sentiment, leading to further AUD selling.
- China Caixin Services PMI: If the PMI is weaker than expected, it could further pressure the AUD due to its correlation with the Chinese economy.
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