The Reserve Bank of Australia maintained steady its monetary policy, but there are some risks looming in the Australian economy. Therefore, strategists at Rabobank suggest selling the Aussie dollar.
“The RBA acknowledges that the trade and technology dispute between the US and China is a continuing source of uncertainty. It also refers to the coronavirus but wisely states that ‘it is too early to determine how long-lasting the impact will be’.”
“The RBA has also left the door open for further rate cuts maintaining that ‘it remains prepared to ease monetary policy further if needed to support sustainable growth in the economy, full employment and the achievement of the inflation target over time’.”
“The combination of the bushfires and the coronavirus risks is already suggesting that the company guidance may be the most interesting aspect of the forthcoming round of Australian earnings data. In view of the risks to growth and the AUD’s sensitivity to commodities prices, we see further downside risk for AUD/USD and look for a move towards 0.65 medium-term.”