Nomura are flagging a lower Australian dollar 0.66 by mid-2020 and 0.65 by the year-end
Citing:
- falling consumer sentiment - to fall further due to bushfire crisis (spending to pick up on the rebuild phase though)
- possible RBA unconventional policy
On the fire impact further out:
- rise in inflation
- rise in construction-related employment
On the RBA:
- Nomura base case is for 2 rate cuts to come, the first next month and both in the first half of this year
- with pricing pressure & employment likely higher ahead this may give scope for the RBA to not deploy unconventional policy but Nomura still expect it as more likely than not
Nomura note risks to their view;
- jobs data and inflation data due ahead of the RBA February 4 meeting
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On those data risks:
- Jobs data due Thursday January 23 (December 2019 jobs report)
- CPI data (December quarter 2019) due Wednesday January 29
