Westpac's updated AUD/USD view - short term risk of 0.69

Author: Eamonn Sheridan | Category: News

From Westpac's morning note on the Australian dollar, forecasts etc  

AU-US yield differentials have continued to grind steadily in the US dollar's favour in recent weeks, but the 10 year spread widening in early October was eye-catching, from around -32bp to -50bp. This looked to be a key driver of fresh AUD/USD lows since Feb 2016, near 0.70. Growing concern over the impact on China's economy of US antagonism also seems to be weighing on AUD, while local politics remains a concern into the 20 Oct by-election. This implies short term risks towards 0.69. But Australia's key commodity prices are substantially higher than early 2016, so trade sub-0.70 might be fairly short-lived. Commodity prices support our year-end forecast of 0.72.
 (bolding mine) 
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