25 Jun 2015
AUD/USD could test 0.72 in a 12-month view – Rabobank
FXStreet (Edinburgh) - Jane Foley, Senior Currency Strategist at Rabobank, sees the Aussie dollar depreciating towards the 0.72 handle in a year’s time.
Key Quotes
“The drop in the price of both coal and iron ore has been an adverse shock to Australia’s terms of trade and looks set to feed through into lower income growth and consumption demand”.
“Although the Australian economy has averaged growth of 3.3% y/y over the past 30 years, it currently appears that the average over the next five years could be notably lower”.
“Given this backdrop, the Australian economy is likely to require a good degree of monetary support in the coming years to help it adjust”.
“The RBA have made no secret of its view that the AUD has been overvalued for years and the rate cut announced earlier this year will have helped AUD/USD push lower”.
“This week comments from the RBA’s Edwards made clear that the central bank stand ready to cut rates again if the recovery stalls”.
“In tune with our concerns about the outlook for growth in China, we see risk that the RBA will cut again in the coming months – though as Edwards made clear, the strength of the Sydney housing market is a thorn in the central bank’s side”.
“Under the weight of additional monetary policy measures, we see risk of AUD/USD pushing towards 0.72 on a 12 mth view”.
Key Quotes
“The drop in the price of both coal and iron ore has been an adverse shock to Australia’s terms of trade and looks set to feed through into lower income growth and consumption demand”.
“Although the Australian economy has averaged growth of 3.3% y/y over the past 30 years, it currently appears that the average over the next five years could be notably lower”.
“Given this backdrop, the Australian economy is likely to require a good degree of monetary support in the coming years to help it adjust”.
“The RBA have made no secret of its view that the AUD has been overvalued for years and the rate cut announced earlier this year will have helped AUD/USD push lower”.
“This week comments from the RBA’s Edwards made clear that the central bank stand ready to cut rates again if the recovery stalls”.
“In tune with our concerns about the outlook for growth in China, we see risk that the RBA will cut again in the coming months – though as Edwards made clear, the strength of the Sydney housing market is a thorn in the central bank’s side”.
“Under the weight of additional monetary policy measures, we see risk of AUD/USD pushing towards 0.72 on a 12 mth view”.