MARKETS SPECTATOR: NAB's downward dollar

The National Australia Bank expects low commodity prices and higher US interest rates to drive the Australian dollar down further.

National Australia Bank has seen enough of the 12.4 per cent decline in the Australian dollar since April –when it was trading at $US1.0572 – to cut its September forecast for the currency to US90 cents from US94 cents.

At 1540 AEST the Australian dollar was trading at US92.66 cents. By December the Australian dollar will trade at US88 cents. It will fall again to US86 cents by March 2014, NAB’s co-head of foreign exchange Ray Attrill told Markets Spectator.

Continued weak commodity prices because of a slowing Chinese economy and higher US interest rates are working together to drive the value of the Australian dollar lower, says Attrill.

By December next year the Australian dollar will be trading at US cents 83, he predicts.

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