It is time for Bloomberg to update its analysis from yesterday on how many billions in dollars Goldman's clients have lost listening to the hedge fund's research call. After earlier apologizing for their EURUSD call, here comes the JBWere guys (the firm's down under subsidiary), saying the time for the downgrade of the AUD is nigh.
From Goldman, which is about a couple of billions dollars in L (not P) behind the curve:
Despite our belief that relative growth and relative interest rates suggest some support for the A$ over coming months, it is hard to see a swift resolution to the major sources of risk aversion impacting Australia and its hard to build a compelling case for offshore investors to bif the A$ higher. In that environment it will be difficult for our long-standing 95c target for the A$ around mid-year to be met; however, we still think our 12 month 90c target is still feasible, albeit with the path to 90 now likely to be via near-term weakness. Whether an ongoing decline in the A$ is in prospect will partly hinge on whether the Treasury Secretary's suggestions that the WACC for the resource sector will be lower are viewed by the market as valid arguments or not. In sum, it is not just risk aversion that is driving the A% lower at present, fundamental factors have also been very important (relative growth, shifting rate expectations, lower commodity prices and capital exit) and the path to lower risk aversion is less dependant on the typical ebb and flow of market sentiment and highly dependant upon the actions of policy markers in Australia and Europe. Our A$ forecasts are now under review.