Local press here in Australia report on BoAML forecast for the Australian dollar
- Forecasts AUD/USD to US84¢ by the end of 2019
BoAML cite:
- fundamentals are strong in Australia, particularly the labour market
- Australian economy has also diversified away from commodities to some degree, so is not likely to be as damaged by adverse developments in China as it would have been in the past
- US dollar currently overvalued by between 5 per cent and 7 per cent
- expects the US dollar to start to soften as the impact of the fiscal stimulus starts to fade
- midterm elections in the US to crimp the ability of the government to undertake more stimulus
- six-month view is that the US dollar will weaken
- Australian dollar … "it's undervalued."
- risk is a trade war … "If you get a trade war, that's a global shock."
- But expects that a trade deal between the US and China … "The US rhetoric was aggressive on policy but we have seen trade deals and so far we have avoided a trade war."
- Elsewhere... "No one wants a crisis in Italy or over Brexit. We are assuming a compromise." Here is the Australian Financial Review link for more
