21 Jan 2015
AUD/USD may target 0.74 by 2015-end – ANZ
FXStreet (Barcelona) - Analysts at ANZ share their monthly outlook on AUD and further forecast AUD/USD to head towards 0.74 levels by 2015-end.
Key Quotes
“With the RBA back in play, domestic factors will once again become a critical element in determining the direction of the AUD.”
“By the end of 2015 we expect that the AUD will be trading at USD0.74, and that in 2016, the prospects for a rebound look equally unlikely.”
“Our new AUD forecasts have also prompted a re-think on the AUD/NZD. While we continue to think that the relative economic divergence between the Australian and New Zealand economies is very well priced with the cross at 1.04, we do see some risks that the cross persists at this level for much of the year.”
“With the JPY having made a large adjustment to the actions of the Bank of Japan (BoJ), the AUD/JPY will likely remain under pressure as the AUD declines and the JPY finds some stability. That said, flows out of Japan, whether private, or those of the government pension fund (GPIF) will continue, and this will keep a floor in this cross close to 90.”
“The recent outperformance of the AUD/GBP should come to an end. While we continue to expect both currencies to underperform against the USD in the near-term, the recent AUD outperformance is not sustainable. While the GBP will be constrained by a large current account deficit and the fact that its largest trading partner (Europe) is struggling to grow, the UK remains closer to hiking rates than easing, and will likely be a key beneficiary of any stabilisation that quantitative easing (QE) brings about in Europe.”
“Similarly, the AUD/EUR will roll over as the prospect of QE in Europe is priced in, but Australia continues to struggle under the weight of declining real income and a diminishing yield advantage.”
Key Quotes
“With the RBA back in play, domestic factors will once again become a critical element in determining the direction of the AUD.”
“By the end of 2015 we expect that the AUD will be trading at USD0.74, and that in 2016, the prospects for a rebound look equally unlikely.”
“Our new AUD forecasts have also prompted a re-think on the AUD/NZD. While we continue to think that the relative economic divergence between the Australian and New Zealand economies is very well priced with the cross at 1.04, we do see some risks that the cross persists at this level for much of the year.”
“With the JPY having made a large adjustment to the actions of the Bank of Japan (BoJ), the AUD/JPY will likely remain under pressure as the AUD declines and the JPY finds some stability. That said, flows out of Japan, whether private, or those of the government pension fund (GPIF) will continue, and this will keep a floor in this cross close to 90.”
“The recent outperformance of the AUD/GBP should come to an end. While we continue to expect both currencies to underperform against the USD in the near-term, the recent AUD outperformance is not sustainable. While the GBP will be constrained by a large current account deficit and the fact that its largest trading partner (Europe) is struggling to grow, the UK remains closer to hiking rates than easing, and will likely be a key beneficiary of any stabilisation that quantitative easing (QE) brings about in Europe.”
“Similarly, the AUD/EUR will roll over as the prospect of QE in Europe is priced in, but Australia continues to struggle under the weight of declining real income and a diminishing yield advantage.”