Just a few days back AUD/USD was all set to achieve parity. But this won’t happen now after the intervention by RBA Governor a few days back when he warned that Aussie Dollar (AUD) is overvalued and not just by a few cents made AUD/USD fall by more than 100 pips. Now the market analysts think that AUD/USD will end the year somewhere around 0.9. Growing demand for the high yielding Australian bonds had been appreciating AUD/USD. But RBA does not want a strong AUD. With AUD getting weaker, it will make AUD/USD carry trade less popular. Did you download Camarilla Pivot Point Indicator free? Watch the video below on RBA!
Another important factor that will slow the capital inflows into Australian mining sector is that most of these projects are completing in 2015. So most of the FDI will dry out by the end of 2014. This will take the steam out of AUD/USD uptrend. “The RBA is going to continue to jawbone the currency lower. If you’ve got a central bank talking down the currency, this is likely to discourage foreign investors from investing in Australian assets,” David Forrester, currency strategist at Macquarie told CNBC. He sees the currency falling to $0.88 by year-end.