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David Goodman, Research Analyst at Westpac, notes that the RBA’s currency language was unchanged from September.

Key Quotes

“The AUD remains below the lower end of our fair value range as trade concerns and diminishing yield support outweigh commodity support. In the short term, with USMCA agreement, the trade war risk premium may be overdone, and the commodity outlook could see upside if China delivers on plans to boost infrastructure spending to help offset any US-driven damage to the export sector.”

“With Australia’s export price basket (WCFIAECI Index on Bloomberg) holding near 6 month highs, there is risk of short-term upside should USD pull back a little and the A$ should thus continue to find support on dips below 0.72 for the moment. Westpac maintains a forecast of 0.70 by mid next year.”