AUD/USD to face some hurdles before rallying to 0.75 by year-end – ANZ

Economists at ANZ Bank expect the AUD/USD pair to reach the 0.75 mark by the end of the year. However, the Aussie could struggle in the near term.

AUD upside through 2023 driven by USD weakness

“We see the AUD finishing the year higher against the USD. This is mostly a function of a valuation unwind in the USD, which is still commanding a premium of more than 10% to our measure of fair value. This adjustment process won’t be linear, however, and the lower interest rate structure leaves the AUD vulnerable on cross exposures.”

“We expect downward pressure on the AUD/JPY as defensive flows and continued expectations of a policy reset will drive JPY higher.”

“We maintain our year-end forecast of 0.75 for AUD/USD but acknowledge that in the short term, fears about a global banking crisis are unlikely to inspire strong risk appetite, which may keep a lid on any upside.”