Flash: Outflows to weaken AUD - BAML

FXStreet (Guatemala) - Strategists at Bank of America Merrill Lynch said ""Fundamentally, we have been quite pessimistic about Australia, both in terms of the difficulty in domestic rebalancing leading to a weak labor market and external trouble with China's growth again showing signs of fatigue".

Key Quotes

"In the short term, however, cross-border flows, both investment and portfolio, have been an important factor in driving AUD the currency and the bond yield. The impact from the flow makes it unlikely for our aforementioned view to be realised at the same time."

"In particular, outflow from Australia would weaken the currency and send the bond yield higher, while the reverse would be true for the inflow. In the near term, we believe inflow will dominate, impeding further AUD weakness and helping the bond to do well."