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Westpac on their call for AUD/USD to 0.66



Westpac on their call for AUD/USD to 0.66




















A recap of Westpac’s call for the Australian dollar, they have reiterated the call in their outlook for June

In summary:

  • US/Australian interest rate differentials and commodity prices remain key for valuation
  • RBA rate cuts – three cuts priced by markets (through mid-2020, WPAC is calling for 3 this year, ie 2 more)
  • US FOMC expectations showing cuts ahead, has stopped AUD from falling too hard. WPAC look for FOMC cuts in Sep and Dec)
  • Also supportive for AUD are commodity prices – “If it were not for the above sustained strength in commodity prices, all else equal, the Australian dollar would be much lower
  • Direct investment flow in Australia waning …  “in the three months to March 2019, the direct investment flow looks to have comet o a halt

WPAC forecast AUD 

  • to 0.68 in H2 this year
  • to 0.66 in 2020 H1
  • 0.67 in H2 2020

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