AUD/USD to tick down amid covid and Chinese related risks – Danske Bank

Chinese activity and outlook have weakened, which has weighed on prices of key Australian export commodities and thus also the aussie. Domestic activity has also taken a hit as restrictions have been unable to curb new infections of the delta variant. All in all, economists at Danske Bank maintain their forecast for lower AUD/USD.

See: AUD/USD to sink towards the 0.7000 level – Commerzbank

Outlook for stronger broad USD to drag AUD/USD down

“The Reserve Bank of Australia expects higher vaccine coverage to ease the situation towards the year-end, but in the near-term outlook remains uncertain. RBA’s August minutes signalled a willingness to react if the situation continues to worsen.”

“Despite the delta variant, we still expect Fed to move forward with the monetary tightening, and the outlook for stronger broad USD will be a key driver of lower AUD/USD as well.”

“Moderately lower commodity prices amid Chinese slowdown weaken Australia’s terms-of-trade, and relatively low vaccine coverage indicates further virus related risks.”