Big call from ANZ strategist – $A to hit $US1.07 in longer run

AFR Marketwrap (pay-walled) reports on a big call from an ANZ currency strategist on the Aussie dollar:

The Australian dollar will continue to appreciate and could top $US1.07 in the longer run as major economies continue to loosen monetary policy and suffer under debt problems.

That is the view of ANZ Banking Group currency strategist Andrew Salter.

“The deleveraging process is going to keep major central banks loosening monetary policy and capital flowing towards Australia because of the high nominal yield that we offer,” he said.

If the ANZ strategist is right, regions dependent on international tourism such as Cairns will continue to struggle. Also, Australian manufacturing would continue to decline, and we’d expect Ford to cease production in Australia.

While the ANZ strategist’s logic is sensible, given concerns around commodity prices and the historical value of our dollar, it’s a brave call. When the US economy fully recovers I expect the Aussie dollar will gradually fall back to the $US0.80-0.90 range.

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