CS expects a big fall for AUD/USD
Analysts at Credit Suisse expect AUD/USD to fall toward its forecasts of $0.8500 and $0.7500 in 3 and 12 months, respectively. Aussie is approaching an important point as slowing Chinese growth is finally pushing iron ore prices lower with negative implications for the AUD, analysts explain.
However, in the next couple of weeks AUD/USD will likely remain supported by a combination of 'temporary' spositive factors:
1) The change in the RBA language in its February policy statement gave the initial spark for the recent AUD/USD recovery.
2) Australian mining firms have been making substantial dividend payments. Given that their revenues are largely in USD, but the dividend payments are often in AUD, this generates flow-based support for AUD.
2) There have been strong foreign purchases of Australian government bonds alongside higher issuance.
4) The market may have been unwilling ro sell the Aussie ahead of the Thursday’s employment data.