BNP Paribas is back in with long AUD/USD, which it took Thursday at 1.0390, to target the 2012 high of 1.0850 with a stop down at 1.0150. The bank says carry looks to dominate the near-term theme and it also expects the combination of Fed easing on December 12 and a resolution of the fiscal cliff to spur risk appetite, which will push USD lower. On the AUD side, the bank says Asia's improving outlook will support inflows into Australia's currency. The bank's own value model suggests AUD is slightly cheap at current levels and a potential December RBA rate cut won't hurt as markets have already priced in a cut for the next two RBA meetings. AUD/USD is now at 1.0405.
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