Westpac has raised its forecast for the Australian dollar
Westpac raised its short- and medium-term forecast for the Australian dollar. The decision was made amid the measures taken by the Reserve Bank of Australia to increase liquidity.
New expectations see AUD/USD growth to 0.7200 by the end of 2020. This implies a strengthening by 4.5% against the current quotes. The previous forecast for the end of the year was 0.6800. The exchange rate rose in early June.
The forecast for 2021 implies 0.7600 as compared to 0.7200 in previous expectations.
Westpac now does not consider the recent rise in iron ore prices, Australia's key export commodity, to be an accident. Supply disruptions from Brazil and increased demand from Chinese steelmakers are unlikely to disappear in the foreseeable future, the bank said.
Consumer confidence has also improved amid the easing of restrictions due to the fight against the spread of coronavirus. Central banks and governments in many countries remain committed to measures to restore financial and economic stability.