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31 Mar 2015
AUD/USD targets 0.73 year-end – BAML
FXStreet (Edinburgh) - The Aussie dollar could depreciate to the area of 0.73 vs. the greenback towards the end of the current year, noted analysts at BAML.
Key Quotes
“To be clear, we remain bearish AUD medium-term with a high conviction”.
“Of the ten reasons we cited for selling AUD/USD, most have transpired and some remain "live" - 1) structural divergence still favors the US over Australia, 2) capital inflows into the resource sector are drying up (a sharp deceleration was already evident in 4Q), 3) the RBA wants the AUD to be below "fair value", 4) Australia's real income growth remains weak and 4) carry support for AUD will be limited”.
“Our conviction that the AUD will weaken has grown and we believe the exchange rate will need to stay below “fair value” if it is to provide any degree of support to the economy”.
“The RBA’s decision to pre-emptively cut signals willingness to use its policy levers to achieve this”.
“We expect AUD/USD to end 2015 at 0.73 and our 2016 at 0.68. We believe any move above 0.80 would offer a good opportunity to sell AUD”.
Key Quotes
“To be clear, we remain bearish AUD medium-term with a high conviction”.
“Of the ten reasons we cited for selling AUD/USD, most have transpired and some remain "live" - 1) structural divergence still favors the US over Australia, 2) capital inflows into the resource sector are drying up (a sharp deceleration was already evident in 4Q), 3) the RBA wants the AUD to be below "fair value", 4) Australia's real income growth remains weak and 4) carry support for AUD will be limited”.
“Our conviction that the AUD will weaken has grown and we believe the exchange rate will need to stay below “fair value” if it is to provide any degree of support to the economy”.
“The RBA’s decision to pre-emptively cut signals willingness to use its policy levers to achieve this”.
“We expect AUD/USD to end 2015 at 0.73 and our 2016 at 0.68. We believe any move above 0.80 would offer a good opportunity to sell AUD”.