Short AUD at 0.6985 – Westpac
|Westpac analysts are recommending to short AUD at 0.6985 for the target price of 0.68, while maintaining a stop loss of 0.7030.
Key Quotes
“Rationale:
- While today's RBA rate cut was as expected, the RBA left in place an easing bias noting that "the Board will continue to monitor developments in the labour market closely and adjust monetary policy to support sustainable growth in the economy". Westpac is forecasting the next cut in August.
- Over and above the 'labour market focus easing bias', the RBA also noted that the "the downside risks stemming from the trade disputes have increased". This is an upgrade to 'trade war' related offshore risks, after last month noting that "outlook for the global economy remains reasonable, although the risks are tilted to the downside".
- We see the A$ as being capped by 0.70 near term being the midpoint of our fair value band on the basis that offshore risks are rising. In this environment, with iron ore feeling like it has peaked as Australian supply has recovered, the A$ should underperform.”
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