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Australian exports account for over half the world’s trade of iron ore and coking coal, the main raw materials used in steel production. Australia’s share of the global market in LNG trade is also rapidly increasing.

  • Forecasts

    Investment falls will end but spare resources may tick up, prompting further policy easing. A sustained external surplus will put upward pressure on AUD and downward pressure on bond spreads. download »
  • FX Notes

    AUD has underperformed substantially relative to commodity prices and interest rate differentials, despite being in external surplus for the first time in decades. We have therefore entered a long position. download »
  • Focus Notes

    Global trend employment, and thereby GDP, growth stands to be weighed down increasingly by slower population growth and ageing, and past offsets from rising female participation may diminish. download »
  • Economics

    • GDP growth remains sub-par on weak domestic demand but net trade has been a support. The external balance is in surplus, the fiscal deficit is eliminated. Unemployment is low, wage and price inflation remain moderate. download »
  • Markets

    • AUD is a little above its real mean. Futures price in a high chance of one further 25bp rate cut by Sep 2020. Bond yields are close to lows; spreads are steady but very low. Equities have underperformed. download »
  • Investing

    • Policy may ease further before rising demand and inflation change the outlook. Bond yields should rise from low levels, but by less than elsewhere. AUD looks low based on the terms of trade and rate differentials. download »