HALISTER1: AUD/USD May Hit Low Point in 3Q, Rising to 0.75 in 2Q 2017: CBA

AUD/USD May Hit Low Point in 3Q, Rising to 0.75 in 2Q 2017: CBA

(Bloomberg) -- Convergence of real interest rates among major economies may be a strong reason why exchange rates have not undertaken large moves in response to changes in nominal rates, Richard Grace, chief currency and rates strategist at CBA, writes in note today.
  • CBA updating its AUD/USD forecasts for first time since March 30 now sees;
    • AUD/USD at 0.7200 by end 3Q vs 0.7700 previously
    • Aussie at 0.7300 by year-end vs 0.7800 and 0.7500 by end 2Q 2017 vs 0.8000
  • Falling unemployment rates in most major economies is blunting FX market reactions when nominal rates are changed, Grace says
    • Low inflation also means that real interest rate levels remain somewhat supportive of exchange rates despite nominal interest rate cuts
  • AUD/USD up 0.2% to 0.7282
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Richard Grace (Commonwealth Bank of Australia)

To de-activate this alert, click here

UUID: 7947283