AUD/USD touched levels below 0.64 after the release of the softer-than-expected Australian July labour report. Economists at Rabobank analyze Aussie outlook.
Under pressure
It is possible that the jobs report is showing signs of seasonal volatility and it remains that policymakers will still be very aware of inflation risks. That said, the bigger picture is dominated by weakness in China’s economy. On the back of this, AUD/USD looks weak.
There is risk of further dips in the value of AUD/USD and we have revised down our forecast for AUD/USD to 0.62 on a three-month view. That said, we see the relative strength of Australian fundamentals as suggesting a recovery back to 0.70 on a 12-month view. This assumes an improved outlook for Chinese growth next year.
