UBS' with their outlook on the AUD for the rest of 2015 (from strategist Geoffrey Yu)

Their major points, in brief:

  • RBA appears somewhat more constructive, does not see any additional need for currency-driven stimulus ... Governor Stevens has repeatedly stated that AUD is largely where they see fair value is

(i.e UBS are referring to the RBA having stopped jawboning the AUD lower)

  • Tradable inflation is still weak
  • Non-tradable inflation is stagnant.
  • Australia continues to be stuck at soft levels of growth, well below the long-run trend ... this looks to continue into the medium term
  • Capex cliff continues to pick up
  • "Income recession" persists.
  • Labour market is holding
  • But lack of rebalancing investment to sustain diversion of jobs away from the mining sector to ensure sustainable growth
  • Trade flow to China has not dropped sharply, and we believe the risks here are to the downside
  • Portfolio liabilities remain stable and barring a major correction in the household sector, we do not see a major liquidation-driven AUD decline
  • Policy will likely remain the primary driver and given lack of structural changes on the fiscal front, monetary policy to remain accomodative

-

Yu is looking for the AUD to decline still, with a one-month forecast at 0.71 and a year-end forecast at 0.69