Analysts at Rabobank, expect the AUD/USD pair to move toward 0.70 on a 12 months view. They point out that the exposure to Chinese risk explains Australian Dollar sensitive to emerging markets.
Key Quotes:
“Australia’s exposure to China through commodity exports explains why the AUD can be more sensitive than other G10 currencies from bad news stemming from emerging markets.”
“Risks regarding Chinese growth in addition to further USD strength both suggest that AUD/USD is likely to remain under pressure in the coming months.”
“We expect Chinese fundamentals to lead to further weakness in the CNY vs. the USD. AUD/CNY is still trading below its January levels but further weakness in AUD/USD will likely be necessary to prevent prices of Australian exports rising in CNY terms.”
“The RBA is unlikely to stand in the way for further slippage in the value of the AUD.”
“Looking ahead the RBA is forecasting that “CPI inflation is expected to be quite low in the September quarter”. It has also signalled that the “Board does not see a strong case to adjust the cash rate in the near term”. Against a backdrop of USD strength, we expect AUD/USD to edge towards 0.70 on a 12 mth view.”
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