An update on the Australian dollar via Westpac, looking for it to drop a little but not yet.
WPAC forecast AUD/USD on 0.71 at the end of September, but still supported into the September. FOMC meeting before then.
The bank citing:
- AUD positive correlation with risk appetite
- broader support also from commodity prices accelerating in recent weeks, especially iron ore and gold … reinforcing Australia's current account surplus
- Australia's renewed Covid-19 containment challenge is a potential brake on gains
- 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.