The AUD only had a modest gain against the USD over the past month, underperforming most other G10 currencies. Despite a dovish Reserve Bank of Australia, economists at HSBC still see potential upside in the aussie this year due to strong domestic fundamentals and a relatively supportive global backdrop.
Australia’s sizable budget and its relatively low debt level i to provide further support for the aussie
“Looking ahead, strong domestic fundamentals and a relatively supportive global backdrop should support the AUD. Australia’s current account position has continued to improve, and the surplus has moved even higher in recent quarters. Much of this strength could be attributed to increasing commodities prices. As the global recovery gathers further steam, demand for commodities is likely to remain firm, supporting Australia’s terms of trade and current account balance. This is likely to remain a bullish feature for the AUD. A global recovery also bodes well for risk appetite, which will be AUD positive.”
“As long as data beats expectations, the AUD should trade relatively well as markets increasingly price in a less dovish RBA. Yet, even if the domestic economy performs poorly, with markets already expecting a dovish RBA, the AUD may find itself maintaining the status quo.”
“It is also worth noting that the Australian government has announced a rather sizeable budget, with net debt projected to rise from 30% of GDP in 2020/21 to 40.9% of GDP in 2024/25. This would be growth supportive and is likely to further support the AUD, especially given the relatively low level of debt Australia has compared to many of its G10 peers. Overall, we expect the AUD to strengthen further against the USD this year.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD extends decline to fresh weekly lows
EUR/USD dips further below the 1.0900 mark, posting fresh weekly lows as the US Dollar finds market favor ahead of the weekly close. The USD gains on a cautious mood as speculative interest awaits comments from Fed Chair Powell and the ISM Manufacturing PMI.
GBP/USD eases below 1.2650 as the US Dollar gathers pace.
GBP/USD continues to retreat, trading below the 1.2650 in the European session on Friday. The US Dollar follows Treasury yields for direction, while the British Pound found support on hawkish BoE comments. All eyes are on US ISM PMI and Powell.
Gold under mild pressure and below $2,040
Gold price (XAU/USD) slips below $2,040, giving up some of its intraday gains, but retaining most of its weekly gains. Caution ahead of first-tier events maintains investors away from the bright metal.
Bitcoin less than 21,000 blocks away from fourth halving, financial advisors await Spot ETF approval
Bitcoin is inching closer to the anticipated fourth halving event, scheduled for April 17, 2024, tentatively. BTC price is likely to rally to its $40,000 target; analysts consider this level a “magnet” for Bitcoin.
Weekly focus: Disinflation continues
This week, inflation came in below expectations in the euro area and the US. In the euro area, headline inflation fell much more than expected to 2.4% y/y (consensus: 2.7% y/y) in November from 2.9% in October.