RaboBank: Australian dollar headed to 68 cents on China decoupling

This makes more sense to me than 90 cents:

AUD … is worst-placed for a US-China decoupling, the RBA’s Debelle just gave a speech in which he said a lower AUD would be beneficial to support the economy, and that higher public debt levels (which the RBA will support) are not a problem.

The RBA’s projections, always too optimistic, are also that it will be three years before rates need to rise again.

Ask the BOJ how long it has taken them

We see scope for AUD/USD to pullback towards 0.71 on a three-month view and to fall to 0.68 in six months

I’m either less or more aggressive on the timeframe, though, at either six weeks or one year. Either we see risk off hit AUD hard soon and then rebound after northern hemisphere politics clears. Or we see the AUD rally into next year as iron ore stays strong and DXY weakens again.

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About the author

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.