I read this today on SMH. 'Capital Economics chief markets...

I read this today on SMH.

'Capital Economics chief markets economist John Higgins says in a research note on Wednesday that the broader weakness resulting from years of declining commodity revenues, coupled with interest rate divergence, will hold down commodity currencies such as the Aussie and the New Zealand and Canadian dollars well after export prices have begun to recover.
"We think these [commodities export] prices are likely to recover a little next year, if not before," he said.
"However, we do not expect this to fuel a rally in these countries' currencies against the US dollar, given the outlook for monetary policy at home and in the US."
Higgins says the eventual shake-out of high-cost commodity producers will go some way to addressing the imbalance arising from China's softening demand, although he says this will take longer in the case of iron ore and coal, Australia's principal goods exports to the world's second-biggest economy.
Nonetheless, broader economic weakness in Australia because of declining national income will force the Reserve Bank to cut the cash rate twice more, to 1.5 per cent, by the end of next year, he says.
This will force further depreciation in the local currency.
"We are not convinced that a turnaround in commodity prices will drive these major commodity currencies higher over the next year or so," Higgins says.
"The reason is that we think the previous falls in the prices of these countries' commodity exports will act as a major drag on their economies, with the result that the stance of monetary policy will be looser than generally expected, unlike in the US."


Read more: http://www.smh.com.au/business/markets/aussie-dollar-resists-commodities-rout--for-now-20151117-gl1hcm.html#ixzz3rnkYEjZ1