The Aussie dollar was under pressure today after the weaker than expected employment data for January.
That saw the sellers take control and drive the Aussie back to 0.7650.
But the selling is not over according to ANZ currency strategist Daniel Been, who put out a note before the data telling clients to sell AUDUSD at 0.7720 with a target of 73 cents.
Like Goldman Sachs, who have a forecast of 72 cents for the Aussie, Been says that the downgrades to commodity prices add to accumulated fundamental evidence, such as a weaker economy and more RBA rate cuts, the Aussie is headed lower.
This he says, “means that pressure remains not only on the AUD risk premium, but on the valuation level as well. These forecasts imply that pressure will remain on the domestic economy and it will limit the ability of the RBA to hike rates in 2016. This will also add to the pressure that is being placed on the AUD. As such, the likelihood of another test lower is growing.”
At the current level of 0.7650 the Aussie is around the post-float average since Treasurer Keating let the market determine its value in December 1983. But when does an asset price every stop at the average price?
History tells us that when the market falls out of love with the Aussie dollar down the mineshaft it goes.