A nice little note from Credit Suisse sums up the state of play in the Aussie dollar for now:
While it will be an ‘uncertain Summer’ post the Brexit vote, we think that the likelihood that little will get done, in terms of negotiations of the UK’s exit from the EU, until October means that volatility could quieten down and commodity currencies experience some near-term upside on the back of carry trade demand.
However, we see that the AUD is currently close to its long-term fundamental value and that a rally without the justification of improved outlooks for global growth, commodity prices or the Australian economy would push it into overvalued territory.
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
