The Australian dollar has consolidated earlier gains over the last month. The outlook for the aussie remains positive, but economists at CIBC Capital Markets have tempered the expected pace of gains.
Tracking sideways with underlying support
“We retain a positive outlook overall and forecast AUD/USD at 0.8000 by end-2Q, the same level reached at end-February. We have tempered forecasts further out, with one influence being a less bearish USD outlook on an expected announcement of tapering and consequent firmer US yields. Another is the RBA’s extended accommodative outlook, which we expect to be confirmed at the July meeting.”
“While policy divergence may slow AUD/USD gains, underlying support from a robust economic recovery and also via strong commodity prices will outweigh, thus instructing our positive forecast track.”
“Another COVID-19 lockdown in the State of Victoria introduces caution to the outlook, as do ongoing tensions with China. However, on that front, overall commodity exports have remained strong with some signs of increasing shipments to other markets.”
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