Westpac note that "the AUD is closing in.....>

AUSSIE: Westpac note that "the AUD is closing in on our mid '19 forecast of

$0.70 at a much faster pace than we had envisaged. Recall that the key arguments

we have used throughout '18 to signal a significant fall in AUD from its peak in

Jan '18 of $0.81. Fears of a global trade war & general contagion through

emerging markets seem to be dictating this current development. We would argue

that these two factors will prove to be largely transient in terms of

implications for the AUD. Accordingly we are slightly lowering our end '18

forecast from $0.73 to $0.72 & exp. the final adjustment in the profile to $0.70

to play out through H119. However we are not sharply lowering our target low

point in AUD - at this stage recent movements look to be an overreaction to

fears that will not be franked. In that regard we point to the outperformance of

Australia's basket of commodity export prices. Export prices are running well

ahead of the normal relationship with the AUD. That is, on the basis of the

export price basket, the Australian dollar looks under-valued. On the other hand

there is a looser relationship between the AUD/USD and the AU/US interest rate

differential."