AUD: Expecting continued underperformance – Nomura

The research team at Nomura expects AUD to underperform on the key crosses, such as against the EUR and GBP owing to combination of softer near-term growth momentum, lower level of Australian-centric commodity prices and other economic factors.

Key Quotes

 “With respect to the AUD, the combination of softer near-term growth momentum, lower level of Australian-centric commodity prices (such as iron ore) driven by rising supply and an expectation of a moderation in momentum in the Chinese property market Chinese property market, lack of a positive monetary policy impulse as we retain a weak bias for further RBA easing in contrast to further interest rate hikes by the US Fed, should be depressive forces. That said, the synchronised global recovery, Australia’s improved balance of payments picture, and relative stability in the long end Australian-US real yield spread should provide downside support. Nevertheless, a central part of our view continues to be for the AUD to underperform on the key crosses, such as against the EUR and GBP.”