Forex Flash: EUR/AUD looks attractive based on mitigated fears – ANZ

FXstreet.com (Barcelona) - Foreign direct investment is still a fundamental underpinning to the AUD. This has been related to large-scale LNG projects but is increasingly being seen in real estate as well. This is related to higher yields on Australian residential and commercial properties relative to those in the rest of the developed world.

The exchange rate remains subject to reserve diversification out of the euro, yen and US dollar. According to FX Strategist Andrew Salter at ANZ, “Japan’s efforts to reflate its economy will heighten the urgency of this process at some institutions. Nevertheless there is scope to see the Australian dollar weaker against some crosses.”

“We are long EUR/AUD given the attractive entry levels, and a belief that the Cypriot debacle will eventually be seen in perspective. Our initial target is 1.2988 before unwinding fully at 1.3300. We are neutral on AUD/USD, expecting it to remain stubbornly high around 1.05 for the remainder of 2013.” Salter adds.