3 Jul 2013
Flash: AUD/USD at fair value? – Westpac
FXstreet.com (New York) - According to Global FX Strategist Sean Callow at Westpac, “On the AUD side, we have seen stabilization on a range of crosses, consistent with Westpac's view that AUD/USD is now close to fair value, in the 0.91-0.9200 region.”
However, the RBA showed today that it can still hurt the AUD with jawboning. Despite holding the cash rate at 2.75%, the RBA statement was a little gloomy and included specific references to the AUD decline. While acknowledging the 10% fall in AUD since early April, the RBA still deemed the currency "high" and suggested further depreciation could occur, which would help Australia's economy rebalance.
Moreover, there remained "scope" for further monetary easing, as the inflation outlook was consistent with the 2-3% target, "notwithstanding the effects of the recent depreciation of the exchange rate." Westpac looks for an August rate cut, only about 50% priced. “Hence, while AUD should still find support in coming weeks from better Asian data and stretched AUD spec short positioning, the stars aren't really aligned for AUD longs right now.” Callow adds.
However, the RBA showed today that it can still hurt the AUD with jawboning. Despite holding the cash rate at 2.75%, the RBA statement was a little gloomy and included specific references to the AUD decline. While acknowledging the 10% fall in AUD since early April, the RBA still deemed the currency "high" and suggested further depreciation could occur, which would help Australia's economy rebalance.
Moreover, there remained "scope" for further monetary easing, as the inflation outlook was consistent with the 2-3% target, "notwithstanding the effects of the recent depreciation of the exchange rate." Westpac looks for an August rate cut, only about 50% priced. “Hence, while AUD should still find support in coming weeks from better Asian data and stretched AUD spec short positioning, the stars aren't really aligned for AUD longs right now.” Callow adds.