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.
“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”.