The latest updated view on the Australian dollar from Westpac, the bank sees it a little lower, their forecast:
- end-Sep forecast is 0.70, though a soft USD should keep lending support near term
More:
- AUD's rally to above 0.71 coincides with the MSCI World index reaching highs since Feb, keeping the Aussie's traditional positive correlation with risk appetite firmly intact.
- support is broader than equities however, with commodity prices accelerating in recent weeks, especially iron ore and copper. Westpac's index of Australia's commodity export prices is up 21% since late April, reinforcing Australia's current account surplus.
- Australia's renewed Covid-19 containment challenge is a potential brake on gains, however.
- While the RBA does not favour either negative rates or FX intervention, the weakening domestic economic outlook could raise expectations that the RBA might take other steps to loosen policy to support the labour market, where unemployment is still rising.
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The year so far for AUD/USD:
