Back
28 Jul 2015
AUD/USD should remain vulnerable - Rabobank
FXStreet (Bali) - Rabobank FX Strategy Team notes that the AUD/USD should remain vulnerable, lowering the forecast towards 0.71 by year-end.
Key Quotes
"While the sharp drop in NZD/USD this year is evidence that the market has embraced the dovish tone of the RBNZ, there is still considerable resistance to the notion that the RBA may be poised to cut rates imminently."
"Firmer iron ore prices this week have lent some support to the AUD. This is linked with speculation that Chinese steel mills may have started to re-stock."
"However, a supply glut in both iron ore and coal combined with Chinese growth worries suggests that respite for these markets is likely limited."
"In a recent speech RBA Governor Stevens discussed why the Australian labour market has held up surprising well so far in the light of the drop in commodity prices this year. However, in view of reports of the potential loss of thousand of mining jobs globally (Anglo American alone may cut 53K jobs), the Australian jobs market is clearly vulnerable."
"Governor Stevens is due to speak again on July 30. In view of the proximity of the August 4 policy meeting, the market will be looking for policy clues and we would expect a more dovish to emerge. Counter to market expectations we see risk of more than one rate cut from the RBA this year.
Key Quotes
"While the sharp drop in NZD/USD this year is evidence that the market has embraced the dovish tone of the RBNZ, there is still considerable resistance to the notion that the RBA may be poised to cut rates imminently."
"Firmer iron ore prices this week have lent some support to the AUD. This is linked with speculation that Chinese steel mills may have started to re-stock."
"However, a supply glut in both iron ore and coal combined with Chinese growth worries suggests that respite for these markets is likely limited."
"In a recent speech RBA Governor Stevens discussed why the Australian labour market has held up surprising well so far in the light of the drop in commodity prices this year. However, in view of reports of the potential loss of thousand of mining jobs globally (Anglo American alone may cut 53K jobs), the Australian jobs market is clearly vulnerable."
"Governor Stevens is due to speak again on July 30. In view of the proximity of the August 4 policy meeting, the market will be looking for policy clues and we would expect a more dovish to emerge. Counter to market expectations we see risk of more than one rate cut from the RBA this year.