Fash: FX Reserve flows may be negative for AUD - RBS

FXstreet.com (Barcelona) - Despite the pick up in Chinese economic data and iron ore prices, risk-off sentiment led by EM markets and Syria are factors which continue to weigh on the AUD, notes Greg Gibbs, FX Strategist at RBS.

Another reason for the AUD weakness, according to Gibbs, may be from FX reserve managers: "Several EM countries were reported or rumoured to have added AUD to FX reserves over recent years, tending at times to push the AUD above what would be explained by fundamental developments" Gibbs said, adding that "in recent weeks, the reverse flows may be occurring and reserve Managers may need to sell AUD to rebalance reserves as they churn through USD reserves in defending their currencies."