AUD: Weakness all the way in future – ANZ

By FXStreet FXStreet (Delhi) – Daniel Been, Research Analyst at ANZ, suggests that the recent weakness in the Australian dollar is going to be far more extended, supported by the global and domestic economic backdrop.

Key Quotes

“The AUD has sailed through levels which would be considered fair relative to domestic economic fundamentals and has begun to provide a stimulatory tailwind to the non-mining economy.”

“Our analysis suggests that this is not unusual, and indeed if history is any guide, the overshoot is likely to persist for some time yet. We retain our forecast of a trough in the AUD at USD0.67, however believe that the risks of further downside remain significant.”

“This naturally raises the risk that AUD weakness is going to be far more extended, and in fact that we are at risk of a two standard deviation move down towards USD0.60. With our current forecasts reflecting a one standard deviation move from fair value we recognise that the distribution of risks remains sharply lower.”

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Source:: FX Street