AUD/USD could grind lower to the 0.75 area – TDS

Strategists at TD Securities believe there is room for the Aussie Dollar to drop to the 0.75 region vs. the greenback.

Key Quotes

“Growth may be below trend but employment continues to shine, with a near-record participation rate the only reason that the unemployment rate remains sticky at 5½% (RBA accepts 5% as the NAIRU). So a healthy labour market is not a hurdle to higher rates per se, it's wages growth closer to 3%/y, not 2%/y. We keep our Nov hike, and pencil in two more next year 2019 (May and Nov)”.

“There is little in the way of a catalyst to spur a positive reversal in AUD. While employment has been robust, the pickup in wages has been unimpressive, leaving little incentive for the curve to alter RBA expectations anytime soon. We see little reason to be owning AUD in the current environment, particularly with spread compression vs. UST rather pervasive at the moment. As such, we eye a re-test of 75c”.