The Australian had an exciting week so far with the RBA rate decision and the disappointing GDP release. Can it recover?
The team at Credit Agricole sees sell opportunities on any rally ahead of next week’s Australian jobs report:
Here is their view, courtesy of eFXnews:
The AUD has been under pressure, regardless of better than expected retail sales in October.
In the current environment we expect investors’ to favour selling rallies, for instance against the USD.
Although domestic growth conditions have been improving of late, weak commodity price developments indicate little upside risk to inflation.
From that angle the RBA is likely to stick to the view that the currency has to depreciate further in order to compensate for weak commodity prices’ dampening impact on the economy. All of the above stands in contrast to the US, where improving growth prospects keep investors’ Fed rate expectations well supported.
As a result to the above outlined conditions we remain in favour of selling AUD rallies, for instance against the USD.
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