AUD/USD: To end year around current levels - Lloyds

Analysts from Lloyds Bank see the AUD/USD  pair trading in a range around current levels for the rest of the year and forecast that it will raise to 0.80 by end-2017.

Key Quotes:

“The Australian dollar barely reacted to the latest cut to policy interest rates by the Reserve Bank of Australia, which was triggered by a weak CPI print in July. AUD/USD initially declined to a month low below 0.75, but has subsequently recovered back above 0.76.”

“Demand for AUD remains firm, in part because of country’s strong credit rating (AAA), stable political environment and the high yield that Australia offers relative to other developed economies. These three factors are likely to be constructive for the AUD over our forecast period. This, despite the fact that economic data has softened slightly. Retail sales have disappointed, building approvals fell by more than anticipated and Australia’s trade deficit has widened.”

“Meanwhile, US data have firmed, with a strong July non-farm payrolls print(255k) solidifying our call for a December Fed hike. As such, we see the AUD/USD trading in a range for a protracted period, with a forecast of 0.77 for year-end and 0.80 for end-2017.”