From the AFR:
The Australian dollar is trading at close to fair value at the moment, but could dip a few cents further to below US70¢, according to analysis from Westpac.
Westpac’s chief currency strategist Robert Rennie says the combination of falling commodity prices and expectations of an imminent increase in US interest rates are the main drivers of the Aussie’s softness at the moment.
He adds that easing concerns about the Greek debt crisis and Chinese equity markets, coupled with the relative allure of Australian interest rates, particularly to Japanese pension funds, means the local unit may be close to its floor in the current cycle.
Westpac has the best wholesale bank research by some distance but right now they’ve lost the bearish compass that gave them as an edge for the past few years. They’re currently calling the bottom for Australian rates, a big cycle of rate rises in the US and now a bottom for the Aussie. Wrong, wrong and wrong.