Westpac Still Target $0.75 At Year End

Westpac note that the "northern summer's risk rally and USD rout extended to AUD/USD 0.74 on 1 Sep. Since then, headwinds have sprung up, including US equity wobbles as the election looms and fiscal support wanes, along with a rebound in Covid-19 cases in the US and Europe. The RBA's dovish shift adds weight to the A$, with consensus growing for not just cuts in official rates to 0.1% in November but some form of QE. Trade below 0.70 may become frequent near term. But this would be a buying opportunity. The RBA is still not attracted to negative rates and Australia's historically large trade surpluses provide some insulation. Moreover, we expect an improvement in risk appetite post-US election and aggressive Fed easing, undermining USD multi-month. We retain our 0.75 year-end target."