We expect the AUD to remain a buy on dips versus currencies such as the JPY and USD. This is still due to the notion that the currency should benefit from further improving global risk sentiment and stable RBA rate expectations.
According to the latest central bank minutes a period of stability for rates is regarded to be the most prudent course. At the same time the currency is still regarded as being too high by historical standards.
However, in an environment of stable rate expectations the currency should stay driven by external factors such as risk sentiment, which we expect to improve further on the back of rising global growth expectations.
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