Fresh AUD/USD forecasts from Westpac, citing "a substantial rally in
commodity prices"

The past two months have seen a substantial rally in commodity prices

  • Since mid-June, iron ore has risen from USD53 per tonne to USD76 currently
  • Also supportive has been a lift in coal prices, thermal coal increasing from USD81 per tonne to USD99, as well as a rally in crude oil, the Brent benchmark rising from a mid-June low of USD45 per barrel to around USD52 currently

As a result of this broad-based rally, our Australian commodities index currently sits at 234, 10% above its level at the time of the release of our June Market Outlook publication.

The rally in commodity prices and associated currency market reaction has seen us revise our near-term outlook for the Australian dollar higher

  • At September, we now look for the Australian dollar to trade at USD0.78, a touch below the current spot level
  • Past this point, we rely on our assessment of the global economy and our structural fair value model to guide our forecast for the currency.

More:

  • end of 2017 ... we now expect the Australian dollar to end the year at USD0.76, previously USD0.73
  • we have revised up our target level for the AUD by the end of 2018 from USD0.65 to USD0.70.