ANZ have liked the Australian dollar for a while, this from mid-October: ANZ's "5 reasons we like buying AUD in dips"
This the latest from them:
- The AUD has fallen significantly in recent weeks as iron ore underperformed and market rate differentials narrowed.
- We think that these factors are set to become more supportive again and, alongside positive risk appetite, should drive the AUD higher.
- We recommend buying the AUD at USD0.7650, with an initial target of USD0.7900. We reassess at USD0.7525.
More:
Risks around the AUD have tilted significantly to the upside. On a number fronts there appears to be excess pessimism priced in:
- The recent move in the AU/US spread is unjustified by the broad economic circumstances and we think that market pricing for the RBA has become too down-beat.
- Commodity prices look more likely to rise then fall in the month ahead - particularly iron ore.
- Market volatility remains low and the environment remains very conducive to carry. Our risk premium framework suggests that too much downside is in the price now.
