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VIEW: CBA note that "AUD/USD has.............>

- Bonds & Currency News | Market News" >
AUSSIE: VIEW: CBA note that "AUD/USD has experienced a 'v-shaped' recovery.
AUD/USD is now at the lower end of our estimate of the 'fair value' range of
0.66-0.74. Commodity prices have long been the major medium-term driver of
AUD/USD. With the world economy in the early stages of a long recovery, led by
Chinese fiscal stimulus, the prospects for commodity currencies such as AUD/USD
have brightened. We expect AUD/USD to exceed its pre-coronavirus level of $0.70
before the end of '20 & lift to the mid-70s in '21. The Australian government's
huge fiscal stimulus means Australia's recession may be short-lived. By Q320, we
expect the debate in Australia to be about how to safely taper fiscal stimulus
without extending the recession. While we expect AUD/USD to lift in coming
months, AUD/USD will not increase in a straight line. The increasingly fraught
relations between US-China and Australia-China will be an intermittent downside
risk to AUD/USD. Some of these tensions reflect 'great power' rivalry between
the US and China that will not go away soon. Another downside risk to AUD/USD is
that Brazilian iron ore supply is not disrupted by the coronavirus as much as
markets currently fear."
- Bonds & Currency News | Market News" >
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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