The Australian dollar was on the back foot lately, driven lower by various factor. The team at Danske analyze the various forces moving the Aussie and sets out forecasts for the next periods: Here is their view, courtesy of eFXnews: Flows. According to CFTC IMM data, speculative AUD accounts are stretched short . Valuation. Fundamentally, the AUD remains overvalued with a Danske Bank PPP model estimate for AUD/USD of c.0.74. Our FX Short-term financial model also suggest that the pair is currently overvalued with a fair value estimate of 0.824 Risks. Short term, a strong carry performance versus the JPY, in particular, and portfolio flows into Australia from Japanese funds might provide some temporary resistance to AUD weakness. The AUD remains exposed to global risk sentiment. Forecast: 0.82 (1M), 0.81 (3M), 0.80 (6M) and 0.79 (12M). Conclusion. During much of the autumn, markets were pricing in interest rate hikes by the RBA in 2015. Meanwhile, we argued that the risk was considerable of the mining investment drop turning out to have more severe effects on the economy than expected, and that risks were therefore instead skewed to the downside. In the past month, data releases have indeed surprised to the downside and the market has now shifted to pricing in a 55% chance of a rate cut in Q1 next year. We believe the change in pricing is justified and for five main reasons we now believe that the RBA will make a single rate cut in Q1 15 (see next slide for more details). Specifically, we expect the RBA to cut in March and for governor Stevens to communicate an explicit easing bias at the next meeting in February. In addition, we still expect US growth outperformance, relative monetary policy and the USD’s role as an asset currency to pull AUD/USD lower. In light of the above we revise our targets and now expect AUD/USD at 0.82 (prior 0.86) in 1M, 0.81 (0.85) in 3M, 0.80 (0.84) in 6M and 0.79 (0.83) in 12M. For lots more FX trades from major banks, sign up to eFXplus By signing up to eFXplus via the link above, you are directly supporting Forex Crunch. Yohay Elam Yohay Elam Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts. Yohay's Google Profile View All Post By Yohay Elam AUD/USD Daily Outlooks share Read Next EUR/JPY: Selling rallies is the way to go Guest 8 years The Australian dollar was on the back foot lately, driven lower by various factor. The team at Danske analyze the various forces moving the Aussie and sets out forecasts for the next periods: Here is their view, courtesy of eFXnews: Flows. According to CFTC IMM data, speculative AUD accounts are stretched short . Valuation. Fundamentally, the AUD remains overvalued with a Danske Bank PPP model estimate for AUD/USD of c.0.74. Our FX Short-term financial model also suggest that the pair is currently overvalued with a fair value estimate of 0.824 Risks. Short term, a strong carry performance versus the JPY,… Regulated Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk. 4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk. 5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.