25 Nov Five reasons why the Australian Dollar may be close to the bottom
Key Points:
- In the absence of significant fiscal stimulus soon, further RBA monetary easing both in the form of rate cuts and quantitative easing point to more downside for the Australian Dollar.
- However, there is good reason to believe we may be close to the low in the Australian Dollar (or have already seen it); it has already had a large fall; it is just below fair value; the global economic cycle is likely to turn up next year; sentiment towards the Australian Dollar is very negative; and the current account is in surplus.
- Our base case remains for the Australian Dollar to fall to $US0.65 in the months ahead as the RBA eases further, but at the end of 2020 it’s likely to be stuck around $US0.65-70.