AUD/USD expected to weaken to 0.70 in 6-month – Danske Bank

Kristoffer Lomholt, Analyst at Danske Bank, believes the Aussie dollar could depreciate towards the psychological handle at 0.70 in the medium term.

Key Quotes

“While we still think Fed market pricing remains too dovish (especially for 2017) we do not expect a marked repricing sending AUD/USD lower in the short term”.

“With current market pricing for RBA monetary policy, we therefore see relative rates as only a mild negative for the cross in the coming months”.

“While the stabilisation in Chinese construction has been an important driver for sending AUD/USD higher in 2016, we maintain that fundamentals and positioning point to some downside in the coming year”.

“We forecast AUD/USD at 0.72 in 1M (from 0.76), 0.71 in 3M(0.75), 0.70 in 6M (0.73) and 0.70 in 12M(0.73)”.