The Chinese crisis was already hitting the Aussie when data from home such as capital expenditure hit it.
What’s next? The team at ANZ has clear targets:
Here is their view, courtesy of eFXnews:
Over the past twelve months we have seen an evolution in the drivers of the weakness in the AUD from outright misvaluation to deteriorating fundamentals, notes Austrlia and New Zealand Banking Group (ANZ).
“Looking ahead, we are likely to see the drivers change once again, and for risk aversion and market sentiment to come to the fore,” ANZ projects.
“That is not to say that fundamentals will not be important. Rather, it means we expect the recent stabilisation that has emerged in fundamentals will extend, and as such they will have a more tempered impact on the AUD. However, risks here remain to the downside,” ANZ argues.
“On the commodity front, downside risks are dominated by the excess supply in iron ore and are also being met with continued efficiency drives on the cost front. In addition to this, we expect the recent rally in iron ore to reverse as steel demand declines and China steel exports slow,” ANZ adds.
ANZ now targets AUD/USD 0.68 by December 2015 and by 0.67 in March 2016.
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