Quickies from Westpac and CBA morning notes on the Australian dollar
Westpac:
- AUD/USD 1 day: Helped by Friday's fall in US dollar (jobs data response), and likely contained by 0.7400-0.7500.
- AUD/USD 1-3 month: The resilience of US equity markets to the distractions of the Trump administration is a positive backdrop for risk-sensitive AUD. Chinese markets are of course less helpful as the deleveraging push continues, but the uptrend in steel prices suggests potential for recovery in iron ore prices. The rebound in Australian job creation keeps RBA rate cut talk at bay. But multi-month, we expect the ongoing rise in US interest rates to chip away at AUD/USD, leaving it around 0.73 by Q3. (26 May)
(Note the 1 - 3 month view from Westpac is unchanged since 26 May)
CBA:
- AUD/USD will remain firm this week on a softer USD. But AUD will underperform against EUR and GBP.
- The RBA meeting (Tuesday) and Australia's Q1 GDP report (Wednesday) are this week's AUD highlights
- The RBA is widely expected to leave its cash rate at 1.50% and reiterate its neutral stance. Low inflation and weak wage growth give the RBA room to stay on the sidelines.
- Meanwhile, we project Australian economic growth to slow at an annual pace of 1.5% in Q1 (consensus: 1.6%) from 2.4% the previous quarter. Slower Australian economic activity can undermine AUD on the crosses.
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Australian dollar daily
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