With RBA likely to act further, AUD/USD might move towards 0.70 – Rabobank
3 February 2015, 12:01
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Jane Foley, Senior Currency Strategist at Rabobank, forecasts AUD/USD to head towards 0.70 levels over the next 12 months as the threat of further RBA policy action increases.
Key Quotes
“The RBA has made no secret about the fact that it would rather see a weaker exchange rate; jawboning became almost regular last year. However, while AUD/USD is currently trading almost 20% below the levels that persisted at the start of July 2014, the country’s effective exchange rate has been far more reluctant to move lower.”
“It is possible that by harnessing the element of surprise today, the RBA was hoping to achieve a marked move lower in the value of the AUD across the board. It has had some success insofar as it is the worst performing developed world currency on a 1 day view.”
“Given that the threat of further RBA policy action is likely to be left on the table we are forecasting a move towards AUD/USD 0.70 on a 12 mth view.”
“That said, in a disinflationary environment a weaker currency would be welcomed by most other central banks and several others are set to ease policy this year.”
“The element of surprise has been used successfully by both the RBA and the BoC and is a tactic which could be repeated by other central banks.”
Key Quotes
“The RBA has made no secret about the fact that it would rather see a weaker exchange rate; jawboning became almost regular last year. However, while AUD/USD is currently trading almost 20% below the levels that persisted at the start of July 2014, the country’s effective exchange rate has been far more reluctant to move lower.”
“It is possible that by harnessing the element of surprise today, the RBA was hoping to achieve a marked move lower in the value of the AUD across the board. It has had some success insofar as it is the worst performing developed world currency on a 1 day view.”
“Given that the threat of further RBA policy action is likely to be left on the table we are forecasting a move towards AUD/USD 0.70 on a 12 mth view.”
“That said, in a disinflationary environment a weaker currency would be welcomed by most other central banks and several others are set to ease policy this year.”
“The element of surprise has been used successfully by both the RBA and the BoC and is a tactic which could be repeated by other central banks.”
