2017 will present a clearer case for AUD weakness - ANZ

Analysts at ANZ expect 2017 will present a clearer case for AUD weakness following a year of range-trading for the AUD.

Key Quotes

“We expect 2017 will present a clearer case for AUD weakness as interest rate differentials narrow and the risk premium in the AUD is reassessed.”

“We expect further upside to commodity prices is capped. However, the evolving supply/demand balance is a key uncertainty.”

“Where could we be wrong? The likely culprit would be commodities. We expect the recent price spike in iron ore and coking coal to be gradually unwound in 2017 as supply comes onto the market. Further, increasing restrictions on Chinese property investment should also filter through into softer commodity demand next year. If we are wrong and commodities remain elevated in 2017, we doubt this would be enough to see the AUD rally. Rather, we would expect another year of range trading for the AUD.”