AUD: Commodities are not the building block for a sustained rally – ANZ

Research Team at ANZ, notes that the commodities have rallied hard this year and ANZ’s modelling suggests the 20% increase in the RBA commodity price index over the last nine months has added USD2.5 cents to fair value of the AUD.

Key Quotes

“Our forecasts suggest the majority of gains are behind us. Commodity prices are high enough to attract marginal supply back into the market. Our view is that the rise in commodity prices over the last year is already priced into the AUD.

The greater upside risk for the AUD is emanating from the rates market. A move to price in hikes (although this is not our base case) is the biggest risk to our bearish view.”