Commentary by Commonwealth Bank of Australia's currency strategist, Elias Haddad

  • The aussie may have a "more subdued" appreciation path given that the RBA appears in no rush to raise rates
  • Base case is still for AUD/USD to trade higher towards 0.83 bye year-end
  • Sees the AUD rising thanks to solid economic activities and improving global growth and favourable Australian balance of payments
  • US dollar is on a downward trend
  • Risks are that RBA holds rates longer than expected, US-China trade tensions and faster pace of Fed rate hikes
  • CBA expects the RBA to hike rates in November to 1.75%

As highlighted last month, CBA's forecast is sort of the outlier compared to the median forecast which only sees the RBA move to hike the cash rate in Q1 2019.