The commodity story stays super supportive for the aussie but alternate tensions with China are deepening and could deteriorate further. Economists at Westpac recommend ready for dips to 0.7325/50 to buy.
“The commodity story remains super supportive for the aussie, with the 62% iron ore index at seven and a 1/2 year highs of $150 for the first time since 2008. Over the remaining 4 weeks, the Westpac export commodity price index has risen by using 14%, our A$ fair value mannequin output has risen by just over 5% and the A$ by way of just 2.8%. So its clear that the commodity price story factors to further upside.”
“Australia China trade members of the family remain strained. After last month’s selection by China’s MOFCOM to tariff Australian wine at 107.1% to 212.1%, countervailing deposits were extended by 6.3% to 6.4% today. And with Australia having passed the Foreign Relations (State & Territory Arrangements) Bill, making use of that legislation to wind back e.g. NT hire of Port Darwin to Landbridge Group would drive more retaliation subsequent year.”
“We stick with a buy dip view, with dips to 0.7325/50 our preferred target.”