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3 Jul 2014
RBA governor talks down AUD - TD Securities
FXStreet (Łódź) - Prashant Newnaha, Asia-Pacific Macro Strategist at TD Securities, remarks that RBA governor Glenn Stevens's comments today on the overvalued AUD pushed the currency down immediately, from US$0.9436 to 0.9371.
Key quotes
"In the speech he mentioned that the AUD is overvalued ‘and not just by a few cents’ stating ‘we think that most investors are underestimating the likelihood of a significant fall in the Australian dollar at some point'."
"On rates, the RBA did say that monetary policy remains accommodative and that the full effects of the lower cash rate have not been seen yet, but he did say that the RBA still has ‘ammunition’ that saw the OIS strip rally to price in as much as a 60% probability the RBA cuts rates by 25bps in Feb’15."
"We think this is clearly overdone. Gov Stevens did state the signs are early, but the economy appears to be making a transition from the mining boom."
Key quotes
"In the speech he mentioned that the AUD is overvalued ‘and not just by a few cents’ stating ‘we think that most investors are underestimating the likelihood of a significant fall in the Australian dollar at some point'."
"On rates, the RBA did say that monetary policy remains accommodative and that the full effects of the lower cash rate have not been seen yet, but he did say that the RBA still has ‘ammunition’ that saw the OIS strip rally to price in as much as a 60% probability the RBA cuts rates by 25bps in Feb’15."
"We think this is clearly overdone. Gov Stevens did state the signs are early, but the economy appears to be making a transition from the mining boom."