An update from Westpac on what they expect for the Australian dollar.
- Near term AUD/USD could spend some time in the 0.75-0.76 area but price action should become more two-way over Q4 and our year-end target remains 0.75.
Citing:
- AUD absorbed a lot of pressure in September
- China's property sector was in particular focus and the US dollar was supported by an upbeat Fed and safe haven demand. But the Aussie has rallied strongly so far in October, backed by the price squeeze on key commodity exports such as coal, metals and LNG. It is not clear how much more support A$ will garner from this source, as China steel output finally retreats.
- Domestically, NSW's Covid situation has improved dramatically in recent weeks and Australia's unemployment rate may remain under 5.0%. But the RBA continues to insist that wages growth and inflation will remain muted, keeping the cash rate at a globally unattractive 0.1% into 2024.
Bolding above is mine. Note that comment on the RBA - the central bank has insisted time and again that it does not foresee conditions will be in place for a rate hike until 2024 at the earliest. That is two years away. A lot can change in two years. Let's see how the Reserve Bank of Australia forecast pans out. I suspect they'll respond to a change if circumstances/data if warranted and will not treat the 2024 call as sacrosanct if conditions/data change.
ps. Reserve Bank of Australia Governor Lowe speaks (much) later:
- Panel participation by Philip Lowe, Governor, at Universidad de Chile's Conference on Central Bank Independence, Mandates and Policies - Online
- 21 October at 2000 GMT, which is 21 October at 6am Sydney time.
