National Australia Bank with projections for the Australian dollar (NZD also included in pic)
On the AUD, citing:
- Latest strength in commodity prices and risk sentiment have together pulled our short term fair value estimate up from the 0.68-0.69 region to 0.69-0.70
- AUD/USD remains very fairly valued at current levels, both with respect to our short term fair value model (shown above) and longer term valuation metrics.
- suggests we need to see some further improvement in risk sentiment and/or commodity prices to readily justify a (sustainable) top-side break of the prevailing 0.6750-0 0.7050 effective range
- An upside range break remains our central scenario for H2 2020 (year-end forecast 0.72) consistent with an ongoing, infrastructure-heavy China economic recovery and related commodity price strength, and a softer USD.
key risk to this view
- anything that prompts a significant correction in risk sentiment, where internationally we would list the approaching US election as high on the list.
- Locally, poor Australia-China international relations are a risk only in so far as Australian exports to China are impacted on a much bigger scale than to date.
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