FXStreet (Bali) – Greg Gibbs, FX Strategist at RBS, notes that the outlook for the AUD remains modestly negative against a strengthening USD.
Key Quotes
“The RBA is probably of a mind not to shake up the market, preferring the AUD to consolidate at its current lower levels, while keeping rates steady for several months to assess conditions. As such this week’s policy statement is likely to appear balanced.”
“It is possible that the statement tones down the dovish rhetoric on the exchange rate now that it is closer to the psychologically significant 70 US cent mark. RBA Governor Stevens notably avoided repeating the RBA mantra that further depreciation was “both likely and necessary” in a speech on 22 July.”
“Recent economic reports and surveys suggest that the Australian economy is doing better than expected earlier in the year and the non-mining sector is responding to a lower exchange rate.”
“However, broad commodity price trends have deteriorated again in the last month and doubts over the robustness of the Chinese economy and other trading partners in Asia have resurfaced in recent weeks. As such, the outlook for the AUD remains modestly negative against a strengthening USD.”
(Market News Provided by FXstreet)