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2 Aug 2013
Flash: Pressure mounting on AUD/USD ahead of RBA – UBS
FXstreet.com (New York) - Things are going from bad to worse for the AUD, notes Research Analyst Gareth Berry at UBS.
Key quotes
“The currency had already lost its footing under the weight of a broad-based US dollar advance a sharp decline in portfolio flows into Australia greater tolerance of slower growth in China and fears over where Australian growth will come from once mining investment peaks, then recedes.”
“Now upstream inflationary pressures are subsiding too. PPI inflation in Q2 dropped to 1.2% y/y (prev. 1.6%), sending AUD/USD sub-0.89 – This reinforces the RBA’s view that plenty scope remains for further policy easing.
“Another 25 bp cut from the RBA on Tuesday is almost universally expected. It’s nearly fully priced in though, so what additional currency weakness could flow from this decision next week is anyone’s guess.”
Key quotes
“The currency had already lost its footing under the weight of a broad-based US dollar advance a sharp decline in portfolio flows into Australia greater tolerance of slower growth in China and fears over where Australian growth will come from once mining investment peaks, then recedes.”
“Now upstream inflationary pressures are subsiding too. PPI inflation in Q2 dropped to 1.2% y/y (prev. 1.6%), sending AUD/USD sub-0.89 – This reinforces the RBA’s view that plenty scope remains for further policy easing.
“Another 25 bp cut from the RBA on Tuesday is almost universally expected. It’s nearly fully priced in though, so what additional currency weakness could flow from this decision next week is anyone’s guess.”