AUD: How low it can go? – Rabobank

By FXStreet FXStreet (Delhi) – Jane Foley, Research Analyst at Rabobank, notes that the combination of a stronger USD and weak Chinese import data has weighed on the AUD since Friday afternoon.

Key Quotes

“However, the broad-based rally of the USD on the back of Friday’s strong US payrolls report has had the effect of softening monetary conditions elsewhere. This factor combined with the better than expected reading on ANZ’s monthly job adverts has resulted in a scaling back of market expectations regarding a February RBA rate cut. That said, we would argue that the headwinds blowing from China continue to bias the odds in favour of a least one more policy move from the RBA this cycle.”

“Chinese imports plunged 18.8% y/y (in USD terms) in October. Much of this was related to price movements in commodity markets, but even stripping this out import volumes are notably lower than a year ago particularly in bulk materials such as iron ore and coal – which are key Australia’s two major exports. According to Chinese data, iron ore imports by volume dropped 12.3% m/m, 4.9% m/m in October while coal imports plummeted 21.4% m/m, 30.7% y/y.”

“While there appears to be no end in sight to …read more

Source:: FX Street