9 Jan 2015
AUD/USD might push towards 0.78 later this year – Rabobank
FXStreet (Barcelona) - Jane Foley, Senior Currency Strategist at Rabobank, anticipated the AUD/USD pair to push lower towards 0.78 levels later this year, expecting the RBA to continue to talk down the value of the AUD as long as commodity prices remain soft and the effective exchange rates remain elevated.
Key Quotes
“It has been our expectation for a while that weak Chinese growth increases the chances of a RBA rate cut this year. A soft landing in the domestic housing market increases the likelihood that the RBA could act. However, the outlook for the AUD is also likely to have a bearing on the decisions of the RBA.”
“The value of AUD/USD has fallen around 13.5% since early September – aided by broad based USD strength. However, the value of Australia’s effective exchange rate has been less accommodating. Having dropped sharply during 2013, the effective exchange rate rose modestly in 2014, supported by the move higher in the AUD/JPY exchange rate.”
“In its December policy statement, the RBA remarked that “the Australian dollar remains above most estimates of its fundamental value, particularly given the significant declines in key commodity prices in recent months. A lower exchange rate is likely to be needed to achieve balanced growth in the economy”.”
“In our view, as long as the value of the effective exchange rate remains elevated and commodity prices are weak the RBA will continue to talk down the value of the AUD.“
“Although our view that the Fed are unlikely to hike rates until late 2015 suggests that the USD uptrend is likely to suffer some setbacks, we maintain our view that AUD/USD will push lower towards 0.78 later this year.”
Key Quotes
“It has been our expectation for a while that weak Chinese growth increases the chances of a RBA rate cut this year. A soft landing in the domestic housing market increases the likelihood that the RBA could act. However, the outlook for the AUD is also likely to have a bearing on the decisions of the RBA.”
“The value of AUD/USD has fallen around 13.5% since early September – aided by broad based USD strength. However, the value of Australia’s effective exchange rate has been less accommodating. Having dropped sharply during 2013, the effective exchange rate rose modestly in 2014, supported by the move higher in the AUD/JPY exchange rate.”
“In its December policy statement, the RBA remarked that “the Australian dollar remains above most estimates of its fundamental value, particularly given the significant declines in key commodity prices in recent months. A lower exchange rate is likely to be needed to achieve balanced growth in the economy”.”
“In our view, as long as the value of the effective exchange rate remains elevated and commodity prices are weak the RBA will continue to talk down the value of the AUD.“
“Although our view that the Fed are unlikely to hike rates until late 2015 suggests that the USD uptrend is likely to suffer some setbacks, we maintain our view that AUD/USD will push lower towards 0.78 later this year.”