|

AUD/USD to advance at a slower pace than expected and peak 0.80 by mid-2023 – Westpac

Last week, AUD/USD fell sharply, touching 0.71, the lowest level since November 2020. Economists at Westpac confirm the key themes for a rising aussie, but have lowered their expectations.

A Rising AUD through to the end of 2021 and 2022

“Our own central view is that while the starting point for the December quarter for AUD/USD might be even lower than our 0.72 forecast, we expect that Australia’s pandemic performance during the December quarter is likely to surprise markets to the upside.”

“The speed of vaccination rates; the incentives to vaccinate out of the current lock downs; and the imminent lift in vaccine supplies is likely to see Australia vault to near the top of the international ‘tables’ for vaccination ratios during November where up to 90% vaccination remains a possibility.” 

“Westpac is forecasting Australia’s growth rate to lift from 2.4% in 2021 (including the 2.6% contraction in the September quarter) to 5.0% in 2022.”

“We have lowered our world growth forecasts in 2021 from 5.7% to 5.5% and in 2022 from 4.7% to 4.5%. Those revisions still entail only a modest downward revision for growth in China. This increased uncertainty over the outlook has flattened and extended the profile for the AUD/USD from a 0.82 peak in 2022 to a peak in 2022 of 0.78.”

“But, as risks, specifically around the pandemic, dissipate further, including in less developed economies, in 2023, we expect AUD/USD to reach 0.80.”

“The end point for the aussie in 2021 has been lowered from 0.78 to 0.75 also reflecting the heightened uncertainties associated with delta and our lower starting point.”

Author

FXStreet Insights Team

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

More from FXStreet Insights Team
Share:

Editor's Picks

EUR/USD retakes 1.1800 on renewed USD weakness

EUR/USD gains ground after three days of losses, re-attempting 1.1800in the European trading hours on Thursday. The US Dollar sees fresh selling interest across the board, despite hawkish Fed Minutes, as the market mood improves and supports the pair. US Jobless Claims data, Fedspeak and geopolitics remain in focus. 

GBP/USD recovers above 1.3500 amid better mood

GBP/USD finds fresh demand and rises back above 1.3500 in the European session on Thursday. Improving risk sentiment and renewed US Dollar weakness are helping the pair recover ground ahead of mid-tier US data releases and Fedspeak. 

Gold clings to gains above $5,000 amid safe-haven flows and Fed rate cut bets

Gold sticks to modest intraday gains, above the $5,000 psychological mark, through the first half of the European session, though it lacks bullish conviction amid mixed cues. The third round of US-mediated negotiations between Ukraine and Russia concluded in Geneva on Wednesday without any major breakthrough.

Injective token surges over 13% following the approval of the mainnet upgrade proposal

Injective price rallies over 13% on Thursday after the network confirmed the approval of its IIP-619 proposal. The green light for the mainnet upgrade has boosted traders’ sentiment, as the upgrade aims to scale Injective’s real-time Ethereum Virtual Machine architecture and enhance its capabilities to support next-generation payments. The technical outlook suggests further gains if INJ breaks above key resistance.

Hawkish Fed minutes and a market finding its footing

It was green across the board for US Stock market indexes at the close on Wednesday, with most S&P 500 names ending higher, adding 38 points (0.6%) to 6,881 overall. At the GICS sector level, energy led gains, followed by technology and consumer discretionary, while utilities and real estate posted the largest losses.

Injective token surges over 13% following the approval of the mainnet upgrade proposal

Injective price rallies over 13% on Thursday after the network confirmed the approval of its IIP-619 proposal. The green light for the mainnet upgrade has boosted traders’ sentiment, as the upgrade aims to scale Injective’s real-time Ethereum Virtual Machine architecture and enhance its capabilities to support next-generation payments.