We anticipate the upside risk on the USD against AUD if the FOMC statement is in line with hawkish and if the US Q1 GDP figure comes in better than expected at 1.0%, then poor US economic news is getting priced in by the market. The weakness in the US dollar and strength in the Australian dollar has been pretty clear. AUD is up over 2% overnight and close to around +7% since mid April.
Keeping an eye on week ahead:
FOMC statement
1st May: US manufacturing PMI
5th May: RBA keeps rates on hold
8th May: US non-farm payroll data misses again
Formulation of Derivative Strategy:
For US importers who have their payable exposures in AUD, we advocate a buy call on ATM (At The Money) AUDUSD put options.
Buy an ATM 0.80149 Put option with a May 12 expiry.
Costing maximum funds at risk is US$ 897.65 per lot with a breakeven of 0.7938.
Bear in mind that we are well above the levels that we've been over the RBA's February, March and April meetings. I.e. a higher AUD gives them more of a case to cut rates
Entry: ATM (At-The-Money), 0.80149Maximum loss to the extent of premium paid as we are long the put option
Target: Triggered by expected RBA cut on May 5


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