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25 Apr 2016
AUD/USD: Expect a sizeable decline in H2 2016 - Westpac
Sean Callow, Research Analyst at Westpac, continues to expect a sizeable decline in AUD/USD in H2 2016 but it is hard to make the case for a reversal short term.
Key Quotes
“The furious rally in iron ore and steel prices, backed by oil’s striking resilience in the face of the Doha dud argues for an extension of existing AUD spec longs. Broadly positive domestic data adds to the case for the RBA to maintain a steady hand, even if they won’t be welcoming the AUD upswing.
CPI should reinforce that inflation is not a barrier to further easing but the growth outlook remains the key variable. A soft USD in the wake of the FOMC and US Q1 GDP also argues for AUD/USD to grind towards 0.79-0.80, though we remain wary beyond the 1 month view.”
Key Quotes
“The furious rally in iron ore and steel prices, backed by oil’s striking resilience in the face of the Doha dud argues for an extension of existing AUD spec longs. Broadly positive domestic data adds to the case for the RBA to maintain a steady hand, even if they won’t be welcoming the AUD upswing.
CPI should reinforce that inflation is not a barrier to further easing but the growth outlook remains the key variable. A soft USD in the wake of the FOMC and US Q1 GDP also argues for AUD/USD to grind towards 0.79-0.80, though we remain wary beyond the 1 month view.”