Further AUD depreciation seems both likely and necessary

The RBA policy statement, on July 7, which accompanied the decision to leave rates unchanged contained the following reference to the currency, The Australian dollar has declined noticeably against a rising US dollar over the past year, though less so against a basket of currencies. 

"Further depreciation seems both likely and necessary, particularly given the significant declines in key commodity prices". This morning's statement, when rates were also left at 2%, comments only that "The Australian dollar is adjusting to the significant declines in key commodity prices"", says Societe Generale. 

There's nothing to prevent the references to the currency from returning in future meetings but for now, the RBA is no longer talking the currency lower. Fed/RBA policy set to diverge further in the months ahead, and with the AUD still vulnerable to adverse shocks from the Chinese economy or from global commodity markets

"With these, it doesn't seem that the 4-year downtrend in AUD/USD over, but it's not the most attractive short looking forwards", added Societe Generale. 

Since AUD/USD peaked in July 2011, as well as falling by a third against the dollar, AUD has fallen by 12% against NZD for example, and AUD/NZD has a lot of upside as a result now that relative rates are moving in AUD's favour. 

It's fallen by 13% over that period against the Euro, and 30% against sterling, too. Both those stand out as long term opportunities to buy AUD, while FX positions as hedges against more bad news in China are better achieved through NZD/USD shorts now.