AUD/USD to decline moderately going forward – Danske Bank

According to analysts from Danske Bank, a weaker global growth outlook and the Federal Reserve tightening are likely to support the US dollar. They forecast AUD/USD at 0.70 in three months and at 0.69 in six months. 

Key Quotes: 

“Fading global growth momentum has supported broad USD, while worries around the Chinese property sector have weighed on prices of key Australian export commodities, namely iron ore.”

“The Reserve Bank of Australia stuck with its plan to taper asset purchases in September, but the QE program was also extended until February 2022. While restrictions still weigh on economic activity, RBA expects to see a rebound towards year-end as vaccination coverage improves, and September PMIs already indicated easing pressure on economy. That said, market pricing of RBA is already very aggressive.”

“Weaker global growth and Fed tightening are likely to support USD further. While we expect to see further weakening in Australian export prices, AUD already appears weak relative to its Terms-of-Trade, and thus we continue to expect only moderately lower AUD/USD going forward.”