AUD/USD risks falling to 0.6500 by end-2020 – Nomura

Analysts at Nomura are suggesting a weaker Australian dollar vs. its American counterpart to 0.66 by mid-2020 and 0.65 by the year-end amid poor Australian fundamentals and increased odds of Reserve Bank of Australia (RBA) resorting to quantitative easing (QE) this year.

Key Quotes:

“Falling consumer sentiment to fall further due to the bushfire crisis.

Possible RBA unconventional policy.

On the further impact of bush fires, could see rise in inflation and rise in construction-related employment.

Nomura base case is for 2 rate cuts to come, the first next month and both in the first half of this year.

With pricing pressure and employment likely higher ahead this may give scope for the RBA to not deploy unconventional policy but Nomura still expect it as more likely than not.

Nomura note risks to their view.

Jobs data and inflation data due ahead of the RBA February 4 meeting.”