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:
- AUD gained less than G10 currencies versus USD in the past week.
- The Reserve bank of Australia still may cut rates in August.
- 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.
- Domestic economic activity in Australia continued to grow at a below trend pace.
- 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.