Even though the Reserve Bank of Australia (RBA) decided to leave interest rates on hold at 2.0% for the second month in a row today and did not provide a clear hint that more cuts lie ahead, we still think that a further weakening in the outlook will prompt it to reduce rates to 1.5% by December. This implies that the dollar will continue to weaken, perhaps to US$0.70 or below from US$0.75 now.
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