ridethepig | AUD 2019 In Review

2 thg 1, 2020

Here we go with an update to AUD as we enter in 1H20.

Consumers remain the key to the flows here, in my books markets overpriced odds of another cut from RBA in Feb 2020 ahead of income tax cuts in the middle of the year to stimulate the recovery. After RBNZ surprise hold in Q419, NZD was able to sustain a strong bid. After AUD unemployment came in better than expected, smart money is tracking for the same course of action from RBA and AUD.

The shape of the Long-term Macro chart:

The housing market continues to rise with a lack of supply entering into expectation plays by 2021 via declining vacancies and higher rental prices. The low rates will act as a catalyst for price growth.

On the Corporate side, with PBoC using AUD to arbitrage the trade war business investment will continue to pick up in 2020. Scott Morrison will keep public infrastructure at high levels, while the weaker AUD in 2019 will continue to help exports.

Unemployment has shown signs of improving, spare capacity will last till end 2021 and keep inflation via wages benign. This is supportive of RBA remaining on hold and here betting on no further easing as long as macro conditions show signs of improvement and stability.

Dollar bear case:

Australia / New Zealand: Forecast summary

We can continue to update this thread over the coming Weeks, Months and Quarters so feel free to jump in with your idea generation to further the discussion for all.

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