According to analysts from Rabobank revised their AUD/USD forecast to the downside in mid-July but, based on recent Covid related news, they are taking them down again. They even see AUD/NZD moving further to the downside.
“No one is enjoying the debate between Australian state and territory leaders over whether it is still realistic to strive for zero Covid cases, but for many investors based in countries already ravaged by the virus, there is a sense of inevitability about the outcome. Around 2/3rds of Australia’s population is currently reported to be under some kind of lockdown, and it is still unclear how far. Treasurer Frydenburg this week forecast that the Australian economy will contract by 2% in the current quarter, and it is too early to assume that ‘normal’ levels of activity will have resumed by the end of September. Given the worsened economic outlook, the market largely dismissed a better than expected jobs report for July as old news.”
“ In mid-July, we revised lower our year-end forecast for AUD/USD to 0.72 based on expectations of a stronger USD and that the RBA would be a laggard on policy tightening. The worsening in news surrounding the AUD has already taken the currency pair below that level. We are subsequently lowering our AUD/USD forecasts further.”
“The combination of bad news for the AUD and a safe haven bid for the USD has sent AUD/USD down over 3% on a five-day view, back to levels last traded in November 2020. We see risk of further weakness in the currency pair towards 0.70 on a 1 to 3 mth view before a recovery in the AUD sets in next year. Following the RBNZ’s decision this week to leave rates on hold, we have also revised lower our NZD forecasts moderately. However, based on the shorter lockdowns scheduled for New Zealand we continue to expect AUD/NZD to trend lower.”