AUD/USD: Australia’s lagging vaccine rollout highlights aussie's downside risks – Credit Suisse

Economists at Credit Suisse highlight the disappointing pace of Australia’s COVID-19 vaccine rollout as reinforcing the potential AUD-downside risks within the medium-term 0.7415-0.7800 range.

Lockdowns are currently more of a risk than an immediate driver 

“COVID-19 cases in Australia remain controlled, and markets remain relatively constructive on Australia’s growth outlook. The April IMF report upgraded Australian growth expectations to 4.5% in 2021, a full percentage point above their Jan estimate.”

“For now, we think that vaccine delays are more likely to cap AUD upside rather than trigger an AUD downtrend. Given the government’s sensitivity to COVID-19 spikes, however, we think the balance of risks could deteriorate quickly if infection numbers were to rise.” 

“The currently stable status quo keeps us thinking that targeting a range of between 0.7415 and 0.7800 in AUD7USD is appropriate. Lingering faith in the reflation trade leaves us still expecting AUD outperformance against the funding currencies.”