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19 May 2015
AUD/USD seen at 0.75 in 3-month – Danske Bank
FXStreet (Edinburgh) - In the opinion of Signe Roed-Frederiksen, Senior Analyst at Danske Bank, the pair could resume its downside towards the 0.75 level in a 3-m view.
Key Quotes
“This morning the Reserve Bank of Australia (RBA) released minutes from the May monetary policy meeting showing that the central bank retains the option to ease again”.
“In the statement released on 5 May - when the bank decided to cut the cash rate by 25bp - Governor Stevens had left out forward guidance on the future path of monetary policy, which markets perceived as very hawkish”.
“In our base case we do not expect RBA to ease monetary policy further and since the previous cut in February we have only had one 25bp cut in our forecast”.
“Indeed, this morning’s minutes reveal only a minor easing bias in our view. Yet we still expect more AUD/USD downside to play out in the coming months”.
“The AUD still suffers from the significant terms of trade shock and in an environment of Fed hikes looming, the fundamentally overvalued AUD is vulnerable. Consequently, we expect AUD/USD to move lower, targeting 0.78 in 1M and 0.75 in 3M”.
Key Quotes
“This morning the Reserve Bank of Australia (RBA) released minutes from the May monetary policy meeting showing that the central bank retains the option to ease again”.
“In the statement released on 5 May - when the bank decided to cut the cash rate by 25bp - Governor Stevens had left out forward guidance on the future path of monetary policy, which markets perceived as very hawkish”.
“In our base case we do not expect RBA to ease monetary policy further and since the previous cut in February we have only had one 25bp cut in our forecast”.
“Indeed, this morning’s minutes reveal only a minor easing bias in our view. Yet we still expect more AUD/USD downside to play out in the coming months”.
“The AUD still suffers from the significant terms of trade shock and in an environment of Fed hikes looming, the fundamentally overvalued AUD is vulnerable. Consequently, we expect AUD/USD to move lower, targeting 0.78 in 1M and 0.75 in 3M”.