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19 Mar 2015
AUD/USD on its way to 0.74? – Danske Bank
FXStreet (Edinburgh) - Analyst Kristoffer Lomholt at Danske Bank expects further easing by the RBA and Fed’s re-pricing to drag spot towards the 0.74 area in a 3-month view.
Key Quotes
“While the RBA’s decision to leave rates unchanged at the latest monetary policy meeting certainly highlights a degree of caution in the board with respect to the housing market, we still expect RBA to cut rates further in order to ease the rigid transition from a commodity based economy to a diversified model”.
“Consequently, we maintain our view that more AUD downside will play out in the coming months on the back of a single 25bp rate cut in Q2 and speculation of further cuts”.
“In addition, we expect a Fed re-pricing to drive continued USD strength, which should contribute in sending AUD/USD lower towards governor Stevens’ ‘unofficial’ target of 0.75 in 1M and lower still towards 0.74 in 3M”.
“We expect the cross to stabilise in 6-12M when a Fed hiking cycle has been priced and the ‘Aussie’ economy recovers”.
Key Quotes
“While the RBA’s decision to leave rates unchanged at the latest monetary policy meeting certainly highlights a degree of caution in the board with respect to the housing market, we still expect RBA to cut rates further in order to ease the rigid transition from a commodity based economy to a diversified model”.
“Consequently, we maintain our view that more AUD downside will play out in the coming months on the back of a single 25bp rate cut in Q2 and speculation of further cuts”.
“In addition, we expect a Fed re-pricing to drive continued USD strength, which should contribute in sending AUD/USD lower towards governor Stevens’ ‘unofficial’ target of 0.75 in 1M and lower still towards 0.74 in 3M”.
“We expect the cross to stabilise in 6-12M when a Fed hiking cycle has been priced and the ‘Aussie’ economy recovers”.