AUD/USD: Strong uptrend towards 0.72 by year-end, 0.76 in 2021 – Westpac

After having raised from 0.65 to 0.685 over the last month, Bill Evans, Chief Economist at Westpac, forecasts the AUD/USD pair at the 0.72 by the end of the year and as high as 0.76 by the end of 2021.

Key quotes

“We have significantly lifted our target for the AUD/USD pair by year’s end from 0.68 to 0.72. Over the last month, we moved up our target level for the aussie by end-2020 from 0.66 to 0.68, implying that we had become more circumspect about the likelihood of a significant and sustained retracement of the AUD in the second half of 2020. We still expect a much less smooth uptrend in AUD in the second half of 2020.”

“For 2021, we retain our consistently held expectation that a global growth recovery will support risk and boost the demand for Australia’s key exports. Less reliance on policy support and more endogenous momentum will be the hallmarks of 2021. We are expecting global growth to lift from minus 3% in 2020 to positive 5% in 2021, including a stunning 10% growth momentum in China. So, despite the higher starting point (0.72 rather than 0.68), we are still expecting a lift in AUD/USD in 2021, ending the year at 0.76.”