ANZ (in their monthly outlook report) forecasts for the AUD.

Outlook:

  • The good news story for the AUD looks well priced in
  • Risks ahead are more balanced
  • The carry trade may support AUD assets, but RBA easing and downside risks to domestic growth and commodity prices suggest range-bound trading

Forecasts for 2016:

  • September 0.72
  • December 0.67

For 2017:

  • March 0.66
  • June 0.66
  • September 0.68
  • December 0.70

Positives:

  • Domestic growth has surprised on the upside
  • Iron ore has maintained gains
  • Risk assets have been resilient
  • Rally in fixed income has supported high yield currencies
  • Ever lower and more negative yields globally are driving the carry trade and supporting the AUD
  • Weekly Japanese buying of foreign bonds have accelerated and hit record levels recently

Negatives:

  • Weighing is our expectation of further easing from the RBA
  • Rising risks to domestic growth
  • The stimulus from the lower AUD to services trade appears to have peaked
  • Commodities are looking stretched