Scott Haslem, UBS Cheif Economist in Australia, is out with a note this morning saying that he is lowering his long-term Aussie dollar forecast from 85 cents to 80 cents.
A big part of that call is this move that the UBS, “global commodities research team, today, have cut their long term iron ore price to US$75/t cfr (from US$89/t cfr) based on their incentive pricing methodology, and reflecting both rising global iron supply and a lower global demand environment,” Haslem said.
He also believes that the RBA’s neutral cash rate is lower than it used to be in the 3.5% to 4% range which means that, “like lower iron ore prices, lower relative long-term cash rates should contribute to a lower medium term exchange rate.”
He’s not super bearish per se and he notes that 80 is the long term view. In the meantime though Haslem says that, “we continue to target USD0.85 for the AUD end 2014 & end 2015.”