3 Jul 2015
Key events ahead which might drown the Aussie – Westpac
FXStreet (Barcelona) - Rob Rennie of Westpac, maintains a bearish target for AUD/USD at 0.73 by September, but highlights key events ahead which might lead the pair to dip lower more quickly.
Key Quotes
“I have made it very well known in recent weeks and months that I expect to see a breakout from the current 0.7550/ 0.7600 to 0.7800/0.7850 trading range to the downside in the A$ very soon. Westpac maintains its forecasts for 0.73 by September and 0.72 by December. The factors that will drag it there are weaker LNG prices; weaker iron ore prices; weaker terms of trade/ growth; reduced Japanese demand and Fed lift-off.”
“How quickly this happens will depend largely on events over the next few weeks.
These include:
1. The outcome of the Greek referendum on Monday - this is a potentially significant source of volatility and one that could still hit AUD sharply lower.
2. Yellen's speech next Friday in Cleveland on the "U.S. Economic Outlook". This will likely be a precursor for the Semi-Annual Testimony on the 15th July, and thus key guidance on lift-off timing.
3. Australian CPI on July 22 and the outcome of the RBA August 4/ SoMP August 7
4. Commodity prices in the weeks ahead. Westpac is forecasting spot iron ore to hit a low of US$47/t near the end of the September quarter or early in the December quarter. I expect to see Australian LNG export prices to Japan to drop below $7 in June.”
Key Quotes
“I have made it very well known in recent weeks and months that I expect to see a breakout from the current 0.7550/ 0.7600 to 0.7800/0.7850 trading range to the downside in the A$ very soon. Westpac maintains its forecasts for 0.73 by September and 0.72 by December. The factors that will drag it there are weaker LNG prices; weaker iron ore prices; weaker terms of trade/ growth; reduced Japanese demand and Fed lift-off.”
“How quickly this happens will depend largely on events over the next few weeks.
These include:
1. The outcome of the Greek referendum on Monday - this is a potentially significant source of volatility and one that could still hit AUD sharply lower.
2. Yellen's speech next Friday in Cleveland on the "U.S. Economic Outlook". This will likely be a precursor for the Semi-Annual Testimony on the 15th July, and thus key guidance on lift-off timing.
3. Australian CPI on July 22 and the outcome of the RBA August 4/ SoMP August 7
4. Commodity prices in the weeks ahead. Westpac is forecasting spot iron ore to hit a low of US$47/t near the end of the September quarter or early in the December quarter. I expect to see Australian LNG export prices to Japan to drop below $7 in June.”