AUD well under current fair value
A snippet from ANZ's outlook for the ozzn Australian dollar in the week and months to comes.
Their model puts fair value circa 0.70
But still they see AUD/USD lower in the week ahead (higher for the month ahead though);
- While easing geopolitical risks and accommodative global policy have been supportive, only a globally synchronous rise in growth would lift the AUD much above current levels. While RBA easing is likely to have been pushed out by improving labour market momentum, lack of carry from low domestic yields will hamper the AUD in the medium term.
On the virus:
- COVID-19 ... We expect uncertainty around the numbers of identified cases to continue, as identification methods have changed and as industrial activity gradually resumes. On balance, we think growth risks are tilted to the downside for Q1, potentially placing global economic stability in jeopardy. Given the elevated tail risks, our bias remains defensive.