30 Jul 2013
Flash: AUD under pressure – BTMU
FXstreet.com (London) - Lee Hardman at The Bank of Tokyo-Mitsubishi UFJ, Ltdnoted that The Australian dollar has fallen sharply.
Key Quotes:
“The Australian dollar has weakened following dovish comments overnight from RBA Governor Stevens after a speech entitled “Economic Policy after the Booms” which highlights the challenges ahead for Australia as mining investment begins to slow”.
“He commented that “the recent decline in the Australian dollar seems to make sense from a macroeconomic perspective” and that “it would not be a major surprise if a further decline occurred over time””.
“Our long-term valuation framework which incorporates the current prices of Australia’s key commodity exports also suggests that the Australian dollar is still modestly overvalued leaving scope for further downside over the year ahead especially if the economic slowdown in China extends further”.
“Governor Stevens also gave a strong signal that the RBA is likely to lower its key policy rate by a further 0.25 point to 2.50% at next week’s policy meeting, stating that “the recent inflation data do not appear to have shifted the assessment…that the inflation outlook may afford scope to ease policy further if needed to support demand”. He also noted that while there are clearly signs that easy policy is working, “it is not by so much that we see a serious impediment to further easing””.
Key Quotes:
“The Australian dollar has weakened following dovish comments overnight from RBA Governor Stevens after a speech entitled “Economic Policy after the Booms” which highlights the challenges ahead for Australia as mining investment begins to slow”.
“He commented that “the recent decline in the Australian dollar seems to make sense from a macroeconomic perspective” and that “it would not be a major surprise if a further decline occurred over time””.
“Our long-term valuation framework which incorporates the current prices of Australia’s key commodity exports also suggests that the Australian dollar is still modestly overvalued leaving scope for further downside over the year ahead especially if the economic slowdown in China extends further”.
“Governor Stevens also gave a strong signal that the RBA is likely to lower its key policy rate by a further 0.25 point to 2.50% at next week’s policy meeting, stating that “the recent inflation data do not appear to have shifted the assessment…that the inflation outlook may afford scope to ease policy further if needed to support demand”. He also noted that while there are clearly signs that easy policy is working, “it is not by so much that we see a serious impediment to further easing””.