VIEW: HSBC note that "historically it has....>

AUSSIE: VIEW: HSBC note that "historically it has been a good time to buy the

AUD in the depths of a global recession. Again the currency has sprinted out of

the blocks with the rebound from mid-March lows reminiscent of the earlier

stages of previous strong rallies. We recognise that this economic recovery is

likely to be very different and the AUD is vulnerable to false starts.

Nevertheless, beyond the initial Risk On-Risk Off phase, we see four factors

that should be viewed as AUD-supportive over time:

- 1) Greater fiscal flexibility 2) Unconventional monetary policy differentials

- 3) A more resilient external position 4) Cheap valuations

- These drivers tend to be more structural than cyclical. This is quite distinct

from prev. recoveries where the AUD has been able to rely on rising interest

rates & a booming terms of trade to propel it higher, implying the rally should

be more like a marathon than a sprint. With a (socially distanced) crowd roaring

encouragement, it is usual to experience some over-exuberance at the start line.

Expect the AUD to throttle back and gains to proceed at a steadier pace. We now

see the AUD/USD at $0.70 by year-end, rising to $0.75 by mid-2021 (prev. $0.70)"