Currency Analyst since 2010

CS: why AUD/USD may fall?

Although many specialists expect deeper upside correction in Aussie, analysts at Credit Suisse warn that AUD/USD is currently facing stronger risks to the downside. Here’s their reasoning:

  1. AUD gained less than G10 currencies versus USD in the past week.
  2. The Reserve bank of Australia still may cut rates in August.
  3. The latest RBA meeting minutes turned out to be less dovish, but it was written before the data releases showing deterioration in business activity and unemployment.
  4. Domestic economic activity in Australia continued to grow at a below trend pace.
  5. Inflation remains very low providing scope for further cuts.

According to Credit Suisse, Australian dollar has to fall substantially to a more “normal rate”. The bank targets $0.7500 in a year. In its view, Aussie’s fair value lies at $0.6800.

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