RBA watching Australian dollar moves

Christian Edwards
(Australian Associated Press)

Any downward movement in the renewed Australian dollar will be trumped by weakness in the greenback, the National Australia Bank says.

NAB head of FX strategy Ray Attrill said with agreement on tax reform in the US looking “pretty slim,” the US dollar will likely slide sideways against the Australian dollar.

“The first flush of enthusiasm regarding prospects for US tax reform have been replaced with a more sober realisation,” Mr Attrill said in a note titled “Arrested Development”.

The local currency managed 78.97 US cents on Monday – its best mark against the greenback since September 26.

The RBA has previously said a high Australian dollar is a top economic concern with fears a growing AUD/USD exchanged rate can subdue price pressures, weigh on production and employment and hamper economic activity.

Mr Attrill said the local currency may be stronger for a little longer after an optimistic assessment of the economy by the RBA in July triggered the Australia dollar’s recent ascent.

“A bit of patience may now be required before the next leg lower, barring any sharp deterioration in global risk sentiment,” Mr Attrill said on Monday.

In its Financial Stability Review, the RBA said while domestic risks to the financial system continue to originate from household borrowing, the system itself “remains resilient” and its capacity to withstand shocks “continues to be strengthened.”


Like This