The head of a $US 7.7 billion hedge fund has said the Australian dollar needs to drop by a tenth, and predicts it will drop under $US 0.60 before trading between $US 0.62 and $US 0.69 next year.
The Aussie was trading at $US 0.7124 at 8.30 AEDT this morning, reports Business Insider. It has kept most of its gains from yesterday’s unexpectedly strong jobs figures, with unemployment down to 5.9 per cent and 40,000 new fulltime jobs created in the last month.
Mark Farrington, Global Macro & Currency Portfolio Manager at Macro Currency Group, believes the Reserve Bank will cut rates again twice, pushing the dollar downwards.
"The Australian dollar needs to fall another 10 per cent. Looking at the 'OIS strip' [short term money market pricing] it's incredibly conservative,” he told Fairfax.
“I don't think the market expects a full quarter point rate cut until August, which literally means not at all."
The Australian dollar was trading at $US0.80 cents at the beginning of the year, and has fell under $US0.69 in September before recovering slightly.
The devaluation has been cited in recent Australian Industry Group PMI surveys, which have shown the country's manufacturing sector expanding in the last four monthly results.