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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.


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 - 3 month chart to 20 Nov
AUD/USD - 3 month chart to 20 Nov

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 - 3 month chart to 20 Nov
EUR/GBP - 3 month chart to 20 Nov

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.

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