"The S&P have cut Australia's sovereign outlook to negative from stable (while affirming the AAA rating), citing persistent budget deficits. We are bearish on the AUD and target a move to 0.67 by year-end in AUDUSD.

The current fragile risk environment should not be supportive for G10 commodity exporter currencies. Furthermore, our economists expect the RBA to cut rates by 25bp at their next meeting on 2 August, a view now 60% priced into rates markets. The key policy consideration for the RBA is likely that inflationary pressures remain soft and we think Q2 CPI data (released 27 June) is will print in line with the RBA's 1.0% y/y forecast which would be enough to prompt a rate cut

Our medium-term forecasting model BNP Paribas CLEER™ also signals downside in AUDUSD below 70 cents this year".