16 Jun 2014
Weaker AUD expected in H2 - RBS
FXStreet (Barcelona) - Greg Gibbs, FX Trading Strategist at RBS, sees the AUD losing ground in the second half of 2014.
Key Quotes
"The Chinese housing market continues to slow and we expect this to keep commodity prices low. Iron ore prices have fallen further to approach the lows in 2012 and this should help limit upside for the AUD."
"However, as it did between 2010 and 2012, the AUD has the capacity to ignore commodity prices. It remains supported by easy global monetary conditions and diminishing alternative higher-yielding assets."
"Financial conditions in China also appear easier than last year, contributing to a recovery in the AUD. Assessing financial conditions in China is not straight-forward and there are mixed developments including government efforts to curb offshore financing related to bets on the CNY's steady appreciation and commodity-based financing."
"AUD and other higher yield currencies may continue to firm provided China manages to control excesses in its financial system without inducing significant spill-overs to onshore term interest rates. The prospect of lower commodity prices and higher US interest rates guides our forecast for a weaker AUD in the second half of the year."
Key Quotes
"The Chinese housing market continues to slow and we expect this to keep commodity prices low. Iron ore prices have fallen further to approach the lows in 2012 and this should help limit upside for the AUD."
"However, as it did between 2010 and 2012, the AUD has the capacity to ignore commodity prices. It remains supported by easy global monetary conditions and diminishing alternative higher-yielding assets."
"Financial conditions in China also appear easier than last year, contributing to a recovery in the AUD. Assessing financial conditions in China is not straight-forward and there are mixed developments including government efforts to curb offshore financing related to bets on the CNY's steady appreciation and commodity-based financing."
"AUD and other higher yield currencies may continue to firm provided China manages to control excesses in its financial system without inducing significant spill-overs to onshore term interest rates. The prospect of lower commodity prices and higher US interest rates guides our forecast for a weaker AUD in the second half of the year."