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Aussie dollar to drop

by Staff Reporter7 minute read
The Adviser

The Australian dollar is expected to fall to 80 US cents, according to AMP Capital’s head of investment strategy and chief economist Shane Oliver.

Mr Oliver highlighted a downward trend in commodity prices, and the Australian economy deteriorating in relation to the US economy, as a driver of the fall in the Australian dollar.

“Given its overvaluation in terms of relative prices and costs, expect the Australian dollar to fall to [80 US cents],” he said.

Mr Oliver added that the Reserve Bank had missed an opportunity for a free kick in pushing down the Australian dollar with the neutrality of this week's statement following the decision to leave interest rates on hold.

While the decision not to cut rates was expected, Mr Oliver said a statement hinting at a further easing bias could have been used to put further downward pressure on the dollar.

“What was surprising though was that its post-meeting statement was virtually identical to that from last month, leaving out yet again any explicit easing bias,” he said.

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