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Australian Dollar and Euro Heading Higher, Experts Say

Weakness in the Australian dollar since Friday is to be short-lived, experts at National Australia Bank have said. A rally in AUD/USD to 0.74 is on the cards, as are politically-driven moves in EUR/GBP and EUR/CHF towards 0.92 and 1.2.

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The Australian dollar’s recent rally away from long-term lows is set to continue, National Australia Bank’s Ray Attrill has told the Australian Financial Review, with the stage set for an imminent move to US$0.74—a price not seen since August.

The Aussie traded above $US0.73 on Thursday and Friday of last week, reaching as high as US$0.7338, before weakening on Monday and Tuesday to levels in the low US$0.72s.

Despite this week’s slide, the Aussie remains nearly 3 percent higher against the US dollar than its October lows. At £0.565, it’s nearly 6 percent higher against sterling, and is nearly 4 percent higher against the euro and yen, at respective exchange rates of €0.635 and ¥81.39.

AUD to USD - 1 Week chart - Latest
AUD/USD - 1 Week Chart - Latest

The Australian dollar might ordinarily be under pressure, what with the recent plunge in commodities prices and with global political risks occupying headlines.

Traders, though, are choosing to focus on domestic economic data, which remains solid, certainly in comparison with that coming from other parts of the world. Last week’s Australian employment report, for example, was described as “stellar all round” by RBC strategist Su Lin Ong.

Like the Australian dollar, the euro will head higher, per researchers at Danske Bank and Nordea Markets.

Relative to the British pound, an imminent euro rally towards £0.9 is on the cards, thinks Nordea’s Andreas Steno Larson, with potential for £0.92—3.5 percent higher than Tuesday evening’s quote of £0.889.

EUR to GBP - 1 Week chart - Latest
EUR/GBP - 1 Week Chart - Latest

Larson, who considers British Prime Minister Theresa May “doomed,” believes that investors should be far more pessimistic on the pound, what with the “full risk of a new Brexiteer-Prime Minister yet to be priced in.”

The Swiss franc, too, is set to lose out against the euro, which will gain 6 percent to buy Fr1.2 sometime within the next 12 months, per the team at Danske Bank. This is, however, dependent on an “absence of new political risks” and comes with a caveat for a potential short-term dip towards Fr1.10.

When last seen on Tuesday, a little after 8pm in London, EUR/CHF was trading near 7-week lows at Fr1.131.

 

Further Reading

 

Dollar Turbocharged by Economic Data; At Long-Term High Versus Euro, Franc and Krona

A turbocharged US dollar is likely to be “stronger for longer” after reaching long-term highs against a host of major currencies, including the euro, Swiss franc and Swedish krona.

Last update: 25 Apr, 2019

Aussie dollar in the trenches after low inflation result

The RBA has resisted cutting interest rates lower than the record 1.5 per cent, however, this week’s lower than expected inflation data could make a cut inevitable.

Last update: 25 Apr, 2019

Swiss Franc Slumps to 6-Month Low Versus Euro

The Swiss franc continued its shocking run of form on Tuesday, slipping against the euro to its weakest level in 6 months.

Last update: 23 Apr, 2019

8 Percent Drop Coming Soon for Australian Dollar; RBA “Wants a Weaker Currency”

HSBC has reaffirmed its US66¢ year-end forecast for the Australian dollar, thereby signalling an upcoming 8 percent slide in the world’s fifth most traded currency.

Last update: 22 Apr, 2019

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Last update: 24 Apr, 2019

  

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