Capex Comforts Australian Dollar
We remain cautious on the Australian dollar given the risk the Reserve Bank of Australia will cut interest rates again from 2.75% this year. The central bank has an easing bias and domestic data remains mixed. As a result we expect the currency to trade at 0.95 against the US dollar over the next three months and 0.90 over the next twelve months. We also see the Australian dollar underperforming the New Zealand dollar as the Reserve Bank of New Zealand – faced with rising house prices – is more likely to raise rates over the next year.
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