ING Bank economists believe that due to some weakness in the price of iron ore, it causes the risks of the Australian dollar to be skewed to the downside in the short term. In a broader perspective, they see the issue of global reflation and the undervaluation of the aussi, as factors that will take the AUD / USD above 0.8800, even in the face of a fall in the price of the raw material.
Key statements:
“After the Reserve Bank of Australia’s policy change and given the risk of further iron ore correction from current unsustainable levels, the AUD appears more vulnerable than the other currencies in the bloc amid any possible pullback in the history of global reflation “.
“In the long term, we still expect the AUD to benefit from a global risk-positive environment and the general weakness of the USD as the global recovery accelerates. We remain confident that AUD / USD will move above 0.80 in the second half of the year“.
“In relative terms, the AUD may struggle to regain more ground against its closest peer, the NZD, as the monetary policy spread appears to remain a factor, unless there is a surprisingly moderate change and / or a Talk about a foreign exchange intervention by the Reserve Bank of New Zealand. We believe that the risk balance for the AUD / NZD is tilting lower in the first half of this year, and we could see a move towards the 1.05 ”region.
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