The Australian dollar is expected to fall even lower than US levels – the RBA’s cash rate is 75 basis points below the Federal Reserve target, stated a report in Bloomberg, making it among the widest gaps since 35 years ago when the Australian dollar came about.
Experts and economists believe this is reason for cheer. A falling Australian dollar can push up economic growth, hiring and wages without increasing interest. Strategists at Bank of America Merill Lynch expects that the AUD/USD will finish 2019 at 84 cents, reported Business Insider. This will likely be on the back of a less vigilant US Federal Reserve, stimulus from policymakers and firm commodity prices, anticipates UBS’ FX strategists.
BAML says that it will see the next move in rates as up, with current economic momentum suggesting the risk is prevalent for an earlier challenge to current market complacency in RBA pricing. “The strength of the economy provides significant fiscal flexibility for the Morrison government to underpin household incomes and broader spending ahead of the next election in the mid-year Budget update in December,” says BAML.
The RBA’s rate hold at 1.5% has sparked optimism is some analysts, who believe it could ramp up the country’s real estate sector, Moreover, the outlook is positive for the labour market.