AUD this low "not justified" - 2 reasons why

Author: Eamonn Sheridan | Category: Central Banks

Scanning some morning notes, this from the National Australia Bank on the Australian dollar:

  • For now, risk aversion and Fed repricing is the dominant force in FX markets. 
  • That said, when we look at fundamentals, the decline in both the AUD and NZD are not fully justified by the still elevated commodity prices and small moves in relative rate differentials.
  • Unwinds of positions are almost certainly exacerbating the market moves though 
And also, via CBA, comments on the RBA:
  • Under-utilization in the employment market (which is the combination of unemployment and under-employment) has dropped to its lowest in 8 years
and CBA see it falling further, thus:
  • "wages will accelerate ...........  I'm not even listening to what the RBA is saying. I just think they're so far off the pace."
  • "Surely behind closed doors some people are saying 'look this data says wages growth is going to pick up, inflation should pick up,' but they're quite dogmatic as a collective on it"
CBA referring to the RBA as dogmatic due to the central bank repeatedly insisting the conditions for a rate rise will not be in place until 2024 at the earliest. ANZ and WPAC have both forecast rate hikes before then:
HSBC is not sure though:
Scanning some morning notes, this from the National Australia Bank on the Australian dollar:

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