The Australian dollar was hit hard by the Australian rate cut but also managed to recover quite quickly and rise above 0.78.
What’s next for the Aussie? The team at UBS sees it falling:
Here is their view, courtesy of eFXnews:
UBS is pulling forward its RBA interest rate forecast to reflect a follow-up 25bp cut to March, albeit still with the risk that the RBA may still choose to wait until May to confirm the lower trend in growth and the next inflation print for Q1-2015.
“Nonetheless, we still do not expect the RBA to reduce the cash rate below 2%. This is because the easing of financial conditions from the combined impact of 50bp of rate cuts in 1H15 and an AUD that’s likely to continue lower toward our USD0.75 forecast, is likely to be sufficient for the RBA to stop cutting at 2%, given ongoing signs of improved consumer & housing growth, and our forecast for some steadying in global growth in 2H15,” UBS argues.
“Greater insight may be gathered from the RBA’s February quarter Statement on Monetary Policy (due this Friday), where the extent of the RBA’s forecast downgrades will be revealed,” UBS adds.
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