Westpac have updated their outlook for the Australian dollar in a 1 to 3 month time horizon.
In summary, the bank's end-Sept forecast is 0.70
- some pressure on AUD over Q3 likely from a patchy global economy and woeful earnings reports, along with growing geopolitical tensions
And:
- revival in global equities a key contributor to AUD's rebound to the 0.68-0.70 area
- positive correlation with risk appetite firmly intact
- AUD support is broader than equities
- iron ore above $100/tonne on both supply and demand trends, helping Australia maintain a current account surplus for a full year
- Australia's outperformance on Covid-19 containment also raises the prospect of a sharper domestic economic rebound which keeps the RBA comfortable with current policy settings.
