David Goodman, Research Analyst at Westpac, points out that the AUD hasn’t moved much in the aftermath of the RBA decision wherein it left rates unchanged, while commentary remains upbeat, but the board noted “some signs of a slowdown in global trade, partly stemming from ongoing trade tensions.”
Key Quotes
“Given the overarching focus on trade sentiment following the US-China G20 meeting, the statement failed to elicit much movement in the A$.”
“On the currency, the RBA changed language slightly. The “Australian dollar remains within the range that it has been in over the past two years on a trade-weighted basis”, although having risen 2% since the last meeting, the currency is no longer described as being in the lower part of the range as it was in November.”
“Again, this marries with our own modelling. The AUD has moved towards the middle of our fair value range. Clearly near term, trade sentiment will dominate, but with the mid point of our fair value range and 200dma both around 74.20, it is hard to see AUD moving much higher and Westpac maintains a forecast of 0.70 by mid next year.”
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