CBA note that their fair value indicates that “fair value for AUD/EUR is in the range of EUR0.63‑0.71. Fair value for AUD/EUR has been trending higher since early 2020. A lift in the Australian terms of trade and a fall in the Eurozone terms of trade have been key drivers of a higher fair value. Looking ahead we are forecasting AUD/EUR to fall as the world economy slows. In our view market pricing for the RBA cash rate is too aggressive, while pricing for the ECB over the year ahead is about right. An eventual unwinding of RBA market pricing will also weigh on AUD/EUR.”
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