AUD/USD to fall to 0.68 in late-2019 - Westpac


According to Elliot Clarke, analyst at Westpac, US/Australian interest rate differentials and commodity prices remain key for AUD/USD valuation.

Key Quotes

“Looking ahead, while we now expect the FOMC to cut the federal funds rate twice in 2019 (in September and December), the current market expectation of essentially another two cuts in 2020 is, to us, unwarranted. Therefore, with the market having priced too many cuts in for the US and still yet to bring the timeline of the remaining two cuts for this RBA cycle into line with ours, we expect the Australian dollar to depreciate in coming months.”

“From USD0.6960 currently, we look for our currency to fall to around USD0.68 in the second half of 2019, then to USD0.66 in the first half of 2020. The pall over Australia’s economic outlook is thicker and slower moving than the US, and so only a very modest lift in the second half of 2020 can be expected – to USD0.67.”

“In the three months to March 2019, the direct investment flow looks to have come to a halt. Versus the $79bn inflow of 2018, the most-recent quarter saw a annualised net direct inflow of just $3.2bn. In part, this was because Australian firms invested more offshore in the quarter. But, given growth fundamentals and the outsized gains of recent years, it seems appropriate to assume that future direct inflows will be materially smaller than the past seven years. This points to the end of an extraordinary support for the Australian dollar and, as a result, our currency becoming more susceptible to downside shocks.”

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.

Feed news

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD extends losses toward 1.1250 amid coronavirus concerns

EUR/USD is trading closer to 1.1250 as concerns about US coronavirus cases are growing. Eurozone finance ministers are meeting ahead of next week's summit.  US PPI and updated COVID-19 statistics are awaited.

EUR/USD News

GBP/USD pressured under 1.26 amid risk-off mood, Brexit uncertainty

GBP/USD is trading below 1.26, off the highs. Rising US coronavirus cases are pushing markets lower and the safe-haven dollar higher. Concerns about Brexit and the UK refusal to participate in the EU coronavirus vaccine scheme are weighing on sterling. 

GBP/USD News

Gold refreshes session tops, moves back above $1800 mark

The prevalent risk-off mood assisted gold to reverse an early dip to the $1796 region. A modest pickup in the USD demand might cap any further gains for the commodity. Investors also worried about the possibility of further escalation of Sino-US tensions.

Gold News

Canada Net Change in Employment June Preview: June is looking better and better

Job gains expected to more than double in June. Unemployment rate to drop to 12% from 13.7 in May. Ivey PMI was twice its forecast in June, highest since Nov 2019. USD/CAD would benefit from better June job figures.

Read more

WTI drops to fresh weekly lows below $39 amid virus risks, IEA forecast

WTI (August futures on Nymex) extends the steep declines seen on Thursday to drops over 1.50% in the European session this Friday. The oil bears breach the 39 level to hit the lowest levels in eight days at 38.76.

Oil News

Forex MAJORS

Cryptocurrencies

Signatures