Deutsche Bank explains why traders should buy the Australian dollar over the troughs

If, as in the previous six quarters, overall inflation underestimates expectations, she might well see the Australian dollar come under renewed selling pressure, reflecting the decreased likelihood of a RBA rate hike in the foreseeable future.

He could even see the markets start to evaluate in a potential reduction, depending on how lack is

scenario – and we want to argue that it's just a possibility – Deutsche Bank has some advice for anyone who is trading the Australian dollar around the release.

Buy the dip. ["Wewouldbelookingtobuyacashfrom"AUD"saysTimBakerMacroStrategistchezDeutscheBank

" It is because the softer domestic history is now well known. "In addition, the relationship of the last 1.5 years suggests AUD is low relative to this market price, and there does not seem to be much room for cut prices given the RBA's insistence that the next move will be a rise "

An Inflationary History is already largely reflected, mainly reflected in an increase in short speculative positioning on the Australian dollar on the basis of recent data from the American CFTC, as well as market views that do not have a full 25 Account Given this backdrop and the net reluctance of the RBA to further lower official interest rates, it seems that inflation should be largely underestimated for the Aussie under the ressure.

And, since many of his recent moves have been influenced by offshore factors, Baker says that recent developments could work in favor of Aussie.

"The key to the rise of the AUD will be the flow of world news.On this front, we are inclined to take a more positive view," he said.

"President Trump could now turn to worries about the strength of the USD, after the focus previously on trading has hurt emerging market badets and helped the USD by extension.

"We also note that the growth sectors in China, which consume a lot of raw materials, are solid: housing starts rose by 20% last year and equipment sales of

"In addition, Chinese policymakers now seem likely to ease their fiscal stance after already easing monetary policy somewhat."

The latter certainly helped Aussie to bounce Tuesday, and, in the absence of negative news compared to

Australia's Inflation Report will be released at 11:30 (Eastern Time)

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