NAB: Twin Turbo Charged

NAB note that their “broad USD view can pull AUD/USD above $0.75 this year, but we also incorporate a degree of outperformance versus most other majors driven by a strong China growth rebound and related terms of trade tailwinds, plus further CNY appreciation. This can then see AUD/USD move up into a $0.75-0.80 range in the second half of the year.”

• “Risk sentiment can of course be an ongoing swing factor for AUD, but remember it is broader measures - including EM - not U.S. centric ones, that are most relevant for AUD. These can be supported by a stronger China/CNY and better prospects for EU growth given the fall in energy prices.”
• “RBA policy can also be a swing factor, but where we assume at least another two 25bp cash rate rises this year - now slightly more than currently priced by money markets.”