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Robert Rennie, Research Analyst at Westpac, explains that a more confident RBA statement on growth, unemployment and inflation failed to inspire much movement in the AUD.

Key Quotes

“Arguably, this may have had more to do with events in Melbourne rather than Martin Place. That aside, we would not be surprised to see some further strength in the A$ later once the market fully digests likely forecast changes that may be seen in Friday’s SoMP.”

“On the A$ TWI, the RBA again noted that it “remains within the range that it has been in over the past two years on a trade-weighted basis” but that “it is currently in the lower part of that range” – a shift versus the last 2 meetings where recent depreciation against “most currencies” was noted.”

“This marries with our own near term view and modelling. The AUD is only just inside the bottom of our fair value range suggesting that the A$ is at levels that would be seen as supportive for the Australian economy, taking account of the current strength in commodity prices.  Westpac maintains a forecast of 0.70 by mid next year.”