Via Westpac, an update to their shorter-term AUD/USD view

AUD/USD 1-3 month:

  • The Aussie remains somewhat pricey compared to short term fair value estimates, as yield differentials along the curve move steadily in the US dollar's favour. This weight on AUD should only increase over the next year or two.
  • Shorter term though, markets are already priced for a Fed hike this month and no change from the RBA for many months. Moreover, commodity prices have emerged from Asia's lunar new year holidays still holding most of the late 2017 gains.
  • Optimism over global growth remains intact though US-driven trade tensions pose downside risks to global trade volumes and AUD.

We look for

  • 0.78 end-March
  • 0.77 end-June
  • and 0.74 end-December