AUD: 3 reasons to be constructive – Goldman Sachs
|Goldman Sachs' analysts offer their thoughts on Tuesday’s Reserve Bank of Australia (RBA) monetary policy decision while remaining constructive on the Aussie dollar.
Key Quotes:
“Australia's activity data have generally been on the disappointing side in recent weeks especially the collapse in the NAB Business Survey and accelerating declines in house prices.
As a result, despite some tentative evidence of firming inflation pressures, our economists flag that the RBA could drop its hiking bias in the minutes to (Tuesday's) meeting.
However, FX price action … is again a useful reminder that domestic activity is just one small part of what drives AUD, and we see three reasons to be constructive:
- Higher iron ore prices will support the terms of trade
- China-related risks seem to be moving in a more constructive direction
- We think the Fed's "patient" policy stance should support.”
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