CBA: AUD/USD Continues To Trade At The Low End Of Its Fair Value Range

CBA note that "AUD/USD has traded in a tight range around $0.77 since early March. By contrast, the fundamental medium-term drivers of AUD/USD continue to increase. The Reserve Bank of Australia's commodity price index increased by 3% in April. The gains in April follow price increases of over 27% since October. We estimate the fair value range for AUD/USD is $0.78 to $0.89, centred on $0.84. Therefore, AUD/USD continues to trade at the low end of its fair value range. What might trigger the next step up in AUD? Likely catalysts could be global or local. A faster rate of vaccination in Australia and elsewhere, especially Europe. Also, signs of improvement in the world economy, especially Europe and Japan. Another improvement in risk appetite as illustrated by another step up in global equity markets could also help push AUD higher closer to the mid‑point of fair value."