Home AUD/USD set to go below 0.70 – ANZ
AUD/USD Daily Outlooks

AUD/USD set to go below 0.70 – ANZ

AUD/USD has been pressured by weak inflation numbers and China, as always.

The team at ANZ sees further downside potential:

Here is their view, courtesy of eFXnews:

Our framework suggests that the recent decline in the AUD did not make it excessively cheap, and this will limit the veracity of the counter-trend rally that’s currently in play.

While volatility consolidates, the focus may turn back to the fundamental drivers of the AUD. There, rate cut expectations are growing and commodity prices are declining still.

On the domestic front, dynamics are equally unsupportive. Data surprises have turned negative, while at the same time out-of-cycle rate hikes from the major banks (in response to higher capital charges) are raising expectations of further easing from the RBA.

AUD diverging from economic fundamentals

Looking at history suggests that ultimately it is economic fundamentals that win out. In January 2015, when the ECB first announced its foray into unconventional policy, the AUD managed to rally a measly 2%, while in 2014, as economic fundamentals deteriorated in the face of BoJ easing, the AUD depreciated precipitously.

As such, we continue to expect that the AUD will push back below USD0.70.

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.