Scanning some of the projections for the Australian dollar issued over past days.

Via CBA and Westpac. neither are overly bearish on the AUD.

Westpac, in summary:

On what sent the AUD lower:

  • weak Q1 CPI ..., stoked RBA easing expectations
  • rise in the unemployment rate in April appeared to seal the case for RBA action

WPAC note the limited follow-through below 0.6900

Support for AUD from:

  • commodity price basket has rebounded sharply since early April


  • A$ rallies should be capped by RBA rate cuts in June and August and by the deterioration in US-China trade relations
  • but with OIS markets already priced for a sub-1% cash rate by 2020, we see AUD/USD only down to 0.68 by September


  • expect AUD to fall towards 0.68 by the end of September
  • expect the RBA to cut the cash rate by 25bps at the june June meeting (next week, Tuesday June 4)

Similar to Westpac CBA reason the downside for the AUD is limited by the market already pricing the rate cut

  • CBA see another RBA cut in August

CBA point out positives for the economy (and AUD):

  • The APRA proposing easing bank lending restrictions - will help stabilise Australian house prices
  • Election out the way reduces political uncertainty, positive for capex and job growth
  • US Fed likely to cut rates this year and next (likely US dollar fall, AUD to benefit)