Watch for position-squaring in AUD/USD - Credit Agricole

Australian dollar overextended

Credit Agricole CIB FX Strategy Research argues that AUD/USD is likely vulnerable to a short-term correction on elevated long positioning and more cautious comments from the RBA.

"With the AUD having appreciated considerably during the last few weeks it cannot be excluded that central bank members will turn more cautious on the currency. In fact, Deputy Governor Debelle already stressed that a stronger currency is not welcomed

In addition elevated long positioning should have increased position squaring related downside risks," CAICIB notes.

CACIB still targets AUD/USD at 0.75 by the end of Q3.

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