Dovish RBA and rising Canberra-Beijing tensions to restrain AUD’s performance – Rabobank

“Compared to its peers, the RBA is extremely candid in its acknowledgment that QE plays a pivotal role in lowering the worth of the rate of exchange,” note Rabobank analysts.

Key quotes
“In a speech about monetary policy in the week, RBA Deputy Governor Debelle mentioned the rate of exchange on numerous occasions and stated that the aim of the Bank’s bond purchase program “is to place downward pressure on bond yields and therefore the rate of exchange to supply stimulus to the Australia economy”.”

“Much to the consternation of AUD bulls, despite record highs in various commodity prices, the worth of AUD/USD has remained consolidative in recent weeks, only spiking higher after the shockingly weak April US payrolls data undermined the greenback.”

“Although we see the potential for AUD/USD to drift higher to 0.79 on a 6 to 12-month view, the strength of the dovish forward guidance of the RBA including rising tensions between Canberra and Beijing is probably going to still restrain the performance of the AUD.”

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