Strategy Trade

Research evidence excerpt

Strategy Trade

Global Markets Research

3 July 2026Strategy Trade

Foreign Exchange - Global

Research Analysts

NEW: Pay Australia 3m1y versus US 3m1y Global FX Strategy

Andrew Ticehurst - NAL

We disagree with short-end market pricing and think data could retrace. andrew.ticehurst@nomura.com

+61 2 8062 8611

The trade

We pay AU 3m1y versus US 3m1y at a spread of 49bp; we target a 35bp move by end-

September, with a 20bp stop and a conviction score of 3/5.

Rationale

Our fundamental and short-end views differ from current market pricing.

• For Australia, market participants appear to be embracing a view that the RBA rate

hike cycle is likely over, and that housing- and immigration-related weakness could

force it into cutting rates. Our observation – from interaction with investors – is that this

view is particularly prevalent among offshore investors. While we expect a period of

sub-trend growth in Australia, we think the RBA is a long way from considering rate

cuts. We further believe it is likely unwilling to even signal a probable conclusion to its

rate hike cycle, as it would not wish to see financial conditions ease prematurely, while

inflation remains far above target and as upside inflation risk from any renewed turmoil

in the Middle East remains.

• In the US, our colleagues’ view is that Fed Chair Warsh was less hawkish than

perceived at the recent FOMC meeting and leaneddovish at the ECB’s Sintra forum

this week. The market is currently pricing more rate hikes by year-end in the US than

in Australia (~30bp versus 15bp, respectively), while our central case is for unchanged

cash rates in both countries this year.

In addition, respective data surprise indices appear stretched, following a run of stronger

data in the US and weaker-than-expected data in Australia.