HSBC: "In the ‘ugly contest’ of G10 FX, we still think the AUD looks unattractive"

Yep, the Australian dollar beaten with the ugly stick says HSBC

In brief:

• Growing domestic risks that the downturn in the credit cycle leads to slower growth...
• ...have been masked by stronger terms of trade and policy developments elsewhere
• AUD to fall further as it will anticipate rate cuts well in advance of any possible RBA pivot from neutral to easing

In the 'ugly contest' of G10 FX, we still think the AUD looks unattractive versus the higher carry and reserve currency status of the USD.

HSBC concludes with an estimate of what is to come:

• While the external situation may be stabilising, this is masking the growing domestic downside risks for the AUD.
• We maintain our bearish view of the currency, seeing it falling 7% to 0.66 versus the USD this year.