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8 Jul 2013
Flash: RBA to cut in Aug; AUD/USD a sell on rallies - UBS
FXstreet.com (Barcelona) - The combination of carry trades reduction, Fed likely tapering from September, RBA dovishness and the reduced prospects of long-term demand for commodities as China re-balances the economy, are all weighing in the Aussie, notes Mansoor Mohi-uddin, Head of Foreign Exchange Strategy at UBS, on a weekend research note.
UBS Economics expects the RBA to cut interest rates again at next month's meeting on August 6. Mohi-uddin said "Though the weakness of the Australian dollar since May is helping ease monetary conditions, the central bank is likely to act again on its easing bias if Q2 CPI due on July 24 shows inflation is at the bottom of the RBA 2-3% target band." That, in view of the Strategist, "suggests the currency will remain a sell on rallies against both the US and NZ dollars."
UBS Economics expects the RBA to cut interest rates again at next month's meeting on August 6. Mohi-uddin said "Though the weakness of the Australian dollar since May is helping ease monetary conditions, the central bank is likely to act again on its easing bias if Q2 CPI due on July 24 shows inflation is at the bottom of the RBA 2-3% target band." That, in view of the Strategist, "suggests the currency will remain a sell on rallies against both the US and NZ dollars."