We remain constructive on the A$’s 6 to 12- month prospects, with the prospect of further global re-opening and an above-trend growth environment, typically bearish for the US$ and bullish for commodity-driven/risk on currencies such as the A$.
We keep our year-end target of 80c, which suggests retaining at least some partial currency hedging for global portfolios. We have likely entered a range-trading environment in the near-term, as the US$ finds some support from a somewhat more hawkish Fed.
However, the prospect of a strong and sustained global recovery alongside burgeoning US twin deficits should pressure the US$ lower over the next couple of years.
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Written by
David Cassidy, Head of Investment Strategy
David is one of Australia’s leading investment strategists.