AUD/USD Keeps its Bearish Stance Medium Term – Rabobank
The prospects for the Aussie dollar remain tilted toward the bearish side in the medium term, suggested Jane Foley, Senior FX Strategist at Rabobank.
Key Quotes
“Australia’s
unemployment rate dropped to a 2.5 yr low at 5.7% in March suggesting
that the economy is re-balancing well. That said, worrying signals
remain”.
“In 2015, Australian wage growth recorded its slowest
pace in 20 years. This is a double whammy. It is likely to translate
into a slow pick-up in consumer demand. It also suggests that the
government’s tax take will be impacted”.
“Tax revenues have
already been hit by the drop in the value of Australia’s commodity
exports. Moody’s has warned that the budget is unlikely to return to
surplus by June 2021 with modest spending cuts alone”.
“Fairly tight fiscal conditions, low CPI inflation and Chinese headwinds imply further RBA rate cuts this year. We remain bearish on the AUD medium-term”.
