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20 May 2015
AUD/USD aims to the low-0.70s by year-end – JP Morgan
FXStreet (Edinburgh) - Divergent monetary policies from the RBA and the Fed could relegate the pair to test the low-0.70 by the end of the current year, noted analysts at JP Morgan.
Key Quotes
“Movements in the real policy rate spread between Australia and the US have been an important driver of AUD/USD moves over the last decade”.
“50bp of tightening from the Fed in 2015, combined with iron ore prices moving back down from +US60/tn to around US$50/tn is consistent with AUD/USD in the low 70s by year-end”.
“However, on the rates side, with the move being US-driven, our view of a lower AUD/USD relies on the US economy’s 1Q stumble proving temporary”.
Key Quotes
“Movements in the real policy rate spread between Australia and the US have been an important driver of AUD/USD moves over the last decade”.
“50bp of tightening from the Fed in 2015, combined with iron ore prices moving back down from +US60/tn to around US$50/tn is consistent with AUD/USD in the low 70s by year-end”.
“However, on the rates side, with the move being US-driven, our view of a lower AUD/USD relies on the US economy’s 1Q stumble proving temporary”.