外汇聚焦澳元：顺其自然

FX Focus:AUD CurrenciesDeveloped Markets Let it flow ◆We now see modest AUDUSD upside as headwinds soften;the pair has traded at a notable discount to its drivers Lenny JinGlobal FX StrategistThe Hongkong and Shanghai Banking Corporation Limitedlenny.jin@hsbc.com.hk+852 2996 6549 ◆There have notbeen strong foreign portfolio inflows lately;repatriation is rare, but possible if external volatility persists Paul MackelGlobal Head of FX ResearchHSBC Bank plcpaulmackel@hsbc.com+44 203 268 3252 ◆A rise in Super Funds’ hedge ratio is likely, if not alreadyongoing; this could bring AUD3040bn of buying flows We see modest AUDUSD upside as headwinds soften (Table 1). The latest reduction in US tariffsapplied on goods from China is a major steptowardsdeescalation in trade tensions(Bloomberg, 12 May). HSBC Economicsexpects US tariffs on goods from Asia exChina to fall to 20% as well. This shouldalleviate the pressure on the regional growth outlook and improve overall risksentiment.AUDUSD should benefit over time, given Australia’s deep exportdependence on APAC peers and its current account funding needs.Moves inAsian FX and global exUS equities have underpinned AUDUSD (Chart 1). However, in the near term, the broad USD could be supported by the reduction intrade tensions too, complicatingtheAUDUSD reaction.We prefer to position forthe AUD to outperform versus currenciesthat were key beneficiaries ofelevated US policy uncertainty and related risk aversion, e.g. EUR and JPY.Their net long positions have reached stretched levels versus cyclical currenciessuch as AUD (Chart 2). They also screen rich versus drivers such as ratedifferentials. In contrast, ourAUDUSD models have consistently shown it tradingat a discount(Chart 3). The gap between AUDUSD and the median of our model range has recentlynarrowed, but to bring spot above 0.67, i.e. reversing itsfallfollowing the US election,will likely require more than deescalation in trade tensions. One potential candidate is capital inflows, which likely helped the EUR and Asiancurrencies recently. Below we consider three relevant channels: (1) foreign portfolioinflows(2) domestic repatriationand (3) upward adjustmentsofthehedge ratio onforeigninvestments held bydomesticinvestors. We pay particular attention to equityinvestments as debt investments often have a higher FX hedge ratio. There isno evidence of strong foreign portfolio inflows lately.Foreignbased,Australiafocused equity funds have seen limited net inflows since PresidentTrump’sinauguration, following significant outflows over 2024 (Chart 4). While there is nohighfrequency bond flow data, we have observed a gradual decline in yield pickupby owning ACGBs on a hedged basis over other sovereigns (Chart 5). HSBC Goba Research Podcass Lsen o our insghs Fnd ou moe Issuer of report:The Hongkong and ShanghaiBanking CorporationLimited Disclosures & DisclaimerThis report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it. View HSBC Global Research at:https://www.research.hsbc.com 2. Net long positions of the EUR and JPY havereached stretched levels versus that of the AUD Source:Morning Star, HSBC There is no sign of domestic repatriation either, but it is possible if external volatilitypersists(Chart 6). Since 2000, repatriationhasnever lasted more than two consecutivequarters, and, on an annual basis, only 2008 showed a net selling of US equity investments(Chart 7). So far, we have not seen notable outflows from Australiabased, USfocused equityfunds. In fact, there are overall net inflows into USfocused equity funds YTD.Recentdeescalation in trade tensions may argue against large repatriation. In our view,a rise in hedge ratio on foreign investmentsis the most potent, AUDpositiveflow factor.We see two main reasons for this to happen over time, if not already ongoing. First, we see adouble threatand a low hedge ratio. Thedouble threatisthe simultaneousdecline in US equities and the broad USD,which has become more frequent recently. Thisisa major threat to unhedged US equity investments held by Australian investors. Australia’sinternational equity position turned into net creditor in 2013 and has expandedsignificantly since then(Chart 8)Superannuation Funds (Supers) have been key players in thisprocess. Based on data from ABS and ASFA, we estimate the Supers to own aroundAUD500bn worth of US equities (58% of total foreign equity holdings) and AUD60bn worth ofUS fixed income securitiesat the end of 2024, out oftheirAUD2.8trn total investment holdings.While typically the Supers keep a high hedge ratio on foreign fixed income securities, a largeproportion of theirequity positionsis left unhedged. One reason for a low hedge ratio is because owning USDdenominated assets tended toprovide protection given the USD’s safehaven properties. In other words, when the S&P500fell, AUDUSD depreciated on average, adding a layer of