Despite last week's status quo RBA statement and slightly better employment numbers, a number of factors suggest that further AUD weakness is still on the cards, argues Credit Suisse.
1) Though the situation in Greece remains dynamic, lingering uncertainty could further delay Fed hiking expectations, pressuring the RBA's hope for a USD-driven move lower in AUDUSD.
(2) If the SNB, BoJ or ECB ease policy further, there is a material chance that the RBA follows suit - as one of the key reasons the RBA cut rates back in February was to prevent a relative tightening of monetary conditions.
(3) Iron ore prices have fallen nearly 25% in the last month.
(4) Chinese equity sentiment remains under significant pressure despite multiple support attempts by the government.
(5) AUDUSD positioning is much cleaner than months prior
Credit Suisse targets AUD/USD at 0.73 in 3-month and 0.70 in 12-month.
For trade ideas from banks, check out eFX Plus.
