15 Apr 2014
Pulling up near term AUD forecasts - JPMorgan
FXStreet (Bali) - JPMorgan FX Team has pushed up their Jun-14 target in AUD/USD to 0.90 from 0.88, and Sep-14 to 0.88 from 0.87, while forecast trough of 0.87 is now delayed a quarter, to Dec-14.
Key Quotes
"The RBA’s reduced anxiety with currency strength, combined with capital flow tailwinds, see us lift our near term AUD/USD forecasts slightly."
"These supports, however, should be overwhelmed later in the year. The main drivers behind our forecast of a decline in AUD/USD come from short end rate differentials and the terms of trade."
"Further, iron ore prices are down 12% since the start of the year in USD terms, with the terms of trade biased lower through 2014."
"Finally, we note that there remains some vulnerability to a re-pricing of Fed Funds expectations."
"With the corrective phase above the January low extending higher over the past several weeks, the overall setup for AUD has improved. Still, the next line of important resistance levels should be a more difficult test while potentially defining a short term top."
"In line with the current overbought and diverging momentum framework, some consolidation seems likely."
Key Quotes
"The RBA’s reduced anxiety with currency strength, combined with capital flow tailwinds, see us lift our near term AUD/USD forecasts slightly."
"These supports, however, should be overwhelmed later in the year. The main drivers behind our forecast of a decline in AUD/USD come from short end rate differentials and the terms of trade."
"Further, iron ore prices are down 12% since the start of the year in USD terms, with the terms of trade biased lower through 2014."
"Finally, we note that there remains some vulnerability to a re-pricing of Fed Funds expectations."
"With the corrective phase above the January low extending higher over the past several weeks, the overall setup for AUD has improved. Still, the next line of important resistance levels should be a more difficult test while potentially defining a short term top."
"In line with the current overbought and diverging momentum framework, some consolidation seems likely."