FURTHER AUD DOWNSIDE IS LIMITED – CIBC
Economists at CIBC Capital Markets do not expect the Australian Dollar to weaken and retain their AUD/USD forecast of 0.6600 in the first quarter of the year.
AUD should be relatively stable
We do not expect RBA cuts until Q3 or later (after the Fed).
Stable RBA policy amid Fed cuts, and strength in the Australian services sector means that AUD should be relatively stable, despite ongoing China weakness.
We think AUD/USD will continue to react to Fed expectations – with March FOMC pricing now at 50% chance for a cut, we think further AUD downside is limited, and maintain our AUD/USD forecast of 0.6600 in Q1.
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