Call on the Aussie Dollar to decline down to US68c is still in place

Back in February this year, I put out a call predicting the RBA would cut interest rates to 1.5% by the end of the year, and that the Australian Dollar would fall to US68c. Half a year after this call, I’ve updated my view. The 1.5% level for the official rate remains the same, but the timing has been pushed out to mid-2016. The call on the $A also remains in place, with a decline to US68c by the end of the year still quite plausible. My take on the rate cut was made on the view that the economy would continue to suffer through a period of below-trend economic growth, which in turn would place upward pressure on the unemployment rate. But even though economic growth has remained sub-par, the unemployment rate so far has curiously refused to rise. Now, this issue has also been noticed by the RBA, and has led it to question its previous assumption about what it considers the appropriate “trend” growth benchmark for the economy. To read more visit: (VIEW LINK)

David Bassanese
Chief Economist

Author, columnist, investment strategist and macro-economist. Previous roles at Federal Treasury, OECD, Macquarie Bank and AFR. I develop economic insights and portfolio construction strategies for BetaShares' retail and adviser clients.

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