Goldman: Australian dollar headed to 80 cents

From the excellent Tim Toohey at Goldman Sachs:

GS

“Our bearish Australian dollar forecast is underpinned by expectations that US data weakness is transitory, headwinds to Australian growth are intensifying, the next phase in the decline in the terms of trade has commenced, and capital flows are turning less supportive”.

“Geopolitical risks and ongoing concerns over the impact of tightening Chinese financial conditions together risk a more immediate downward adjustment in the Australian dollar.”

GS cut the three month forecast to 85 cents from 90 cents, six month from 88 cents to 82 cents  and 12 month from 85 cents to 80 cents.

I’m not so bearish now!

13 Responses to “ “Goldman: Australian dollar headed to 80 cents”

  1. simon89 says:

    I still suspect the aussie will have one more shot towards the 94~ cent mark in the next few weeks. No chance I’ll be going long though. But not happy to short until then.

    • Possible if markets get Chinese stimulus and taper taper into their heads. If the Fed hinted at pausing for instance. As you say, it’ll be a screaming short if so!

    • migtronix says:

      I agree and I’ll be long, I can see .94 coming. I doubt the Japanese will abstain from another shot at abenomic liquidity pump and they’ll be selling yen against anything that moves.

      • just_the_pip says:

        Another bounce up to that level is possible if markets get excited about taper taper, but I’m not convinced it’ll happen yet. In any case, should AUD make a last gasp run back up it’ll just be another opportunity to add to my previous shorts entered into around the 0.94-0.95 range.
        Still think AUD will be closer to 0.80 than 0.90 come Christmas.

      • migtronix says:

        @just first off killer handle! LOL.

        Nikkei is off 3% so expect AUD to slip under 0.9 handle soon.

      • The Lorax says:

        Over the coming weeks a bounce to the mid 90s is inevitable, as is the bounce in ore prices. What happens after that is anyone’s guess. Hopefully the bad run of economic news in the US is temporary — and the taper returns — and hopefully China is serious about rebalancing this time. I wouldn’t be betting my life’s savings on either though.

    • Mik says:

      How else are we going to prop up the housing markets when the unemploment data ramps up in a year or twos time, lower dollar, more Chinese (I mean overseas) house buying, more construction, more tourism…good times coming back, houses to the moon.

  2. Dave_Comments says:

    Hard to be overly bullish or bearish atm.
    I can see it bouncing between 88-92c area for afew months until the inevitable decline

    Full GS report here -

    https://www.dropbox.com/s/b0ov4ot0wf1ogbq/t%C3%A9l%C3%A9chargement%20%2826%29.pdf

  3. Explorer says:

    Did Goldman happen to mention whether they had set their FX book to profit from a move generated by their forecasts?

    IE were they talking their book for profit?

  4. Dave1892 says:

    I’ve thrown my own personal kitchen sink at shorting the Aussie Dollar from 98 downwards. When the rate starts with a 7 I’ll be converting back.

  5. The Patrician says:

    Great! fine.

    That must mean we can stop trying to belt it over the head with negative real interest rates and wrecking the rest of the economy….right?