Global FX Strategy_ Exiting tactical AUDNZD short

Summary of Global FX Strategy - 31 October 2024 Company and Industry Involved - Company: Citigroup Global Markets Inc. - Industry: Foreign Exchange (FX) Strategy Key Points and Arguments 1. Exit of AUDNZD Short Position: Citigroup has exited its tactical AUDNZD short position for no gain, with a spot reference of 1.1011 as of 10/31. The short was initiated at 1.1010 on 10/28 due to hawkish RBA pricing and stretched positioning, which created attractive asymmetry for AUDNZD downside [1][4][5] 2. Market Conditions: Despite the unwinding of leveraged AUD longs, the AUDNZD pair has remained within a tight range, influenced by stickier real money longs. The exit was timed ahead of key event risks including RBA announcements, NZ Jobs data, and the US election [1][5][6] 3. Positioning Insights: The report highlights that AUD leveraged longs have steeply unwound, while real money longs have remained persistent. This indicates a shift in market sentiment and positioning ahead of significant economic events [5][6] 4. CPI and RBA Expectations: Australian Consumer Price Index (CPI) details were strong enough to avoid dovish repricing by the RBA, although Australian rates have been affected by a recent global selloff. This suggests that inflationary pressures may influence future monetary policy decisions [5][6] 5. Strategic Flexibility: The decision to exit the position allows Citigroup to maintain flexibility to act on developing opportunities in a noisy market environment over the coming days [1][4][5] Other Important but Possibly Overlooked Content 1. Analyst Certification and Disclosures: The report includes important disclosures regarding potential conflicts of interest, as Citigroup may have business relationships with companies covered in its research reports. Investors are advised to consider this when making investment decisions [2][7][8] 2. Market Sentiment Indicators: The report provides insights into market sentiment through positioning data, which can be critical for understanding potential market movements and making informed trading decisions [5][6] 3. Global Economic Context: The report situates the AUDNZD strategy within a broader global economic context, indicating that external factors such as the US election and global market trends are influencing local currency movements [1][5][6] This summary encapsulates the critical insights and strategic decisions made by Citigroup regarding the AUDNZD currency pair, reflecting both market conditions and broader economic influences.