AUD head towards sub 0.7800 - Westpac
The A$ has underperformed over the last week, down 1.8% versus the US$ and at 6 month lows versus the NZ$, points out Robert Rennie, Research Analyst at Westpac.
Key Quotes
“The potent combination of further deterioration in yield spreads (AU-US 10yr spread now firmly in negative territory), limited support from commodity prices, increased focus on political risks and a crystal RBA clear message that “progress in reducing unemployment and having inflation return to target … is likely to be gradual” has seen the A$ head towards the 200dma sub 0.7800.”
“Our fair value framework has continued to argue that the A$ has been “expensive” for the last 4 weeks and thus at risk of weaker price action.”
“Outside of a sharp weakening in the US$ near term, it’s hard to see what will turn the A$ around next week.”
Author
Sandeep Kanihama
FXStreet Contributor
Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.
