AUD: Set to Remain in 0.74 to 0.78 Range for Near-Term - Westpac
Research Team at Westpac, notes that the RBA acknowledged the higher
currency, but put forward 'some increase in commodity prices' and
'monetary policy developments elsewhere in the world' as driving
factors.
Key Quotes
"The Australian
dollar has appreciated somewhat recently. In part, this reflects some
increase in commodity prices, but monetary developments elsewhere in the
world have also played a role". The RBA also noted that "under present
circumstances, an appreciating exchange rate could complicate the
adjustment under way in the economy".
AUD where to from here?
The
recent appreciation is being seen as more of a factor for
consideration, especially if 'an appreciating exchange rate could
complicate the adjustment under way'.
However, without a shift in
the soft easing bias, it's hard to see this as something that would
materially change the outlook for the A$ given recently stronger iron
ore prices, reduced level of concern about China, signs of Japanese
demand for foreign assets and a weak US$ post Yellen's speech. Thus we
remain of the view that the A$ is set to remain in a 0.74 to 0.78 near
term. However, in the short term, we would not be surprised to see a bit
more weakness in the A$, with the potential to test back towards the
0.7500 level.”
(Market News Provided by FXstreet)
