AUD/USD forecasts so far in 2021 are mainly influenced by risk-on or risk-off sentiment dependent on positive or negative news of COVID-19 vaccine results and any early signs of a pick up in US inflation.
Despite the pessimistic outlook there OFX see an opportunity should there be any uptick in global risk sentiment, accelerating a broader AUD rebound towards 0.75 USD.
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In 2021 forecasters have changed direction several times on the Australian dollar saying it could fall below US70¢ or hit US82¢, which leads one to suspect that basically no one has any idea!
From late July and on into September, the AUD dropped against USD due to changing expectations around US Federal Reserve policy and a less positive outlook for global growth.
Another risk-led selloff could lead the AUD toward 0.70 USD. However, an uptick in positive risk sentiment could help the AUD extend the recovery toward 0.75 USD.
The Aussie is the world’s leading risk currency and is therefore always vulnerable to further sell offs when the market goes into a ‘risk-off’ stance.
The emergence of Evergrande and other significant roadblocks such as energy shortages in Europe and China impacting the global economic recovery throughout September prompted a shift in the underlying risk narrative, causing unfavourable conditions for commodity currencies like the AUD. AUD Outlook
Credit Suisse see AUD/USD to drop substantially towards the 0.7085 region.
Westpac downgraded its forecasts for the Australian Dollar in its July market outlook but still see scope for AUD/USD to return to the US82¢ down from their previous year-end forecast of US82¢.
Commonwealth Bank now see a high risk the Australian dollar dips below US70¢ in coming weeks after previously predicting the Australian dollar will rise to US83¢ by the end of the September quarter.
Forecasts and predictions for the AUD/USD exchange rate change all the time, affected by news events and relative sentiment towards the Australian and US economies. This continually updated article reviews AUD to USD bank forecasts and recent trends for both currencies.
In the second quarter of 2020 AUD staged a rapid recovery through the months of April, May and into June up 25% from its mid-March lows to US70c in early June. This is due more to the perceived benefits to Australia of an awakening post-pandemic Chinese economy than the political-social situation in the US depressing the USD.
The Aussie had been savaged in March sliding to US55 cents the lowest since 2003. Growing fears of the coronavirus outbreak moved the market into safer currencies such as the USD and away from AUD, NZD and CAD.
The virus was a double blow to the Aussie after the earlier threat of proxy war between the US and Iran in Iraq had also pared back some of the gains the Aussie had made coming into the New Year.
The Australian dollar had started the new decade strongly climbing to multi-month highs helped along by cooling trade tensions between the United States and China and optimism for global economic growth in the year ahead.
Disclaimer: Please note any provider recommendations, currency forecasts or any opinions of our authors should not be taken as a reference to buy or sell any financial product.