26 May 2015
AUD/USD set to weaken towards 0.70 – Capital Economics
FXStreet (Barcelona) - Paul Dales, Chief Australia & New Zealand Economist at Capital Economics, expects RBA to ease further and AUD/USD to fall lower towards the 0.70 handle.
Key Quotes
“Our forecasts that GDP growth will slow further this year than the RBA expects and that the unemployment rate will rise further are consistent with underlying inflation falling below the lower end of the RBA’s 2-3% target range.”
“We think that the RBA will end up reducing rates more than once, with a cut in August being followed by another reduction in November.”
“Our forecast that rates will end the year at 1.5% suggests there is scope for market interest rate expectations to fall, which could ultimately weaken the dollar from US$0.80 to around US$0.70.”
Key Quotes
“Our forecasts that GDP growth will slow further this year than the RBA expects and that the unemployment rate will rise further are consistent with underlying inflation falling below the lower end of the RBA’s 2-3% target range.”
“We think that the RBA will end up reducing rates more than once, with a cut in August being followed by another reduction in November.”
“Our forecast that rates will end the year at 1.5% suggests there is scope for market interest rate expectations to fall, which could ultimately weaken the dollar from US$0.80 to around US$0.70.”