Analysts at CIBC, forecast that the AUD/USD pair will trade at 0.74 during the fourth quarter and at 0.76 in Q2 2019.
Key Quotes:
“Investors can be forgiven if they’re confused as to why the Aussie continues to weaken. After all, Q2 GDP came in at a very respectable 0.9% q/q pace – good enough to take the annualized rate to 3.4%. That’s above market expectations but in-line with the RBA’s own forecast for 3%+ growth in both 2018 and 2019. Private capital expenditures have been the key driver of growth over the past year, allaying fears following the collapse in mining investment earlier this decade.”
“the key to AUD weakness has been the rise in offshore funding costs borne by domestic banks. Indeed, cross currency basis swaps have widened out considerably since the start of the year. That has led to a few lenders to increase mortgage rates despite no move from the central bank that continues to be concerned with the level of household consumption given high household debt levels.”
“There is reason to be optimistic for the AUD. Despite mortgage rate hikes from domestic lenders, the RBA has pointed out that the average mortgage rate is still lower than it was a year ago. Additionally, the Bank has pointed out that there are signs that wages have troughed and risks are now to the upside. In light of recent downside, we’re revising our AUD forecast to show a slower climb, but the profile should still reflect an appreciating AUD as the RBA is likely to increase rates starting in Q3 2019.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD: A tough barrier remains around 0.6800
AUD/USD failed to maintain the earlier surpass of the 0.6800 barrier, eventually succumbing to the late rebound in the Greenback following the Fed’s decision to lower its interest rates by 50 bps.
EUR/USD still targets the 2024 peaks around 1.1200
EUR/USD added to Tuesday’s losses after the post-FOMC rebound in the US Dollar prompted the pair to give away earlier gains to three-week highs in the 1.1185-1.1190 band.
Gold surrenders gains and drops to weekly lows near $2,550
Gold prices reverses the initial uptick to record highs around the $$2,600 per ounce troy, coming under renewed downside pressure and revisiting the $2,550 zone amidst the late recovery in the US Dollar.
Australian Unemployment Rate expected to hold steady at 4.2% in August
The Australian Bureau of Statistics will release the monthly employment report at 1:30 GMT on Thursday. The country is expected to have added 25K new positions in August, while the Unemployment Rate is foreseen to remain steady at 4.2%.
Ethereum could rally to $2,817 following Fed's 50 bps rate cut
Ethereum (ETH) is trading above $2,330 on Wednesday as the market is recovering following the Federal Reserve's (Fed) decision to cut interest rates by 50 basis points. Meanwhile, Ethereum exchange-traded funds (ETF) recorded $15.1 million in outflows.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.