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20 Nov 2013
Flash: Stop the Press: IMF Concludes the A$ is 10% Overvalued - BBH
FXstreet.com (London) - The currency research team at BBH noted the news that the IMF has concluded that the Australian dollar is about 10% overvalued.
Key Quotes:
“News that the IMF has concluded that the Australian dollar is about 10% overvalued and that is accommodative monetary policy was seized upon as an excuse to extend the Aussie's losses to new lows for the day, near $0.9365”.
“However, there is really no news content there and bid were seen ahead of yesterday's low near $0.9355.
“The IMF estimate of fair value is quite conservative. For example, the by the OECD's estimate, the Australian dollar is a little more than 27% overvalued. Using consumer and producer prices to calculate purchasing power parity would put the Australian dollar 27% and 22% overvalued respectively”.
“The Australian dollar itself is also looking heavier after correcting higher over the past week. The Aussie's three-month bounce (Aug-Oct) ran out of steam after correcting about 50% of the year's decline (~$0.9760 in late Oct). As it has worked its way lower, the 20-day moving average is succeeded in turning back counter-trend advance. It is found near $0.9445 presently. A break of $0.9350 support could spur another cent move and that is where the important technical test will take place (~$0.9250-60)”.
Key Quotes:
“News that the IMF has concluded that the Australian dollar is about 10% overvalued and that is accommodative monetary policy was seized upon as an excuse to extend the Aussie's losses to new lows for the day, near $0.9365”.
“However, there is really no news content there and bid were seen ahead of yesterday's low near $0.9355.
“The IMF estimate of fair value is quite conservative. For example, the by the OECD's estimate, the Australian dollar is a little more than 27% overvalued. Using consumer and producer prices to calculate purchasing power parity would put the Australian dollar 27% and 22% overvalued respectively”.
“The Australian dollar itself is also looking heavier after correcting higher over the past week. The Aussie's three-month bounce (Aug-Oct) ran out of steam after correcting about 50% of the year's decline (~$0.9760 in late Oct). As it has worked its way lower, the 20-day moving average is succeeded in turning back counter-trend advance. It is found near $0.9445 presently. A break of $0.9350 support could spur another cent move and that is where the important technical test will take place (~$0.9250-60)”.