The Australian dollar fell from 0.7709 to 0.7497 against the US dollar in June, as the aussie has underperformed recently despite improving risk sentiment. According to MUFG Bank experts, the AUD/USD pair is expected to strengthen moderately in the future.
“Evidence of increasing COVID-19 infections with the Delta variant becoming predominant is a major short-term concern. The outbreak is being described by the government as a “very serious and present danger” that has necessitated tighter restrictions in a number of cities, with nearly half of the population affected. While keeping that danger in mind, data from Australia is anticipated to continue indicating a significant resurgence (assuming no COVID-19 disruption for an extended period of time).”
“Given that global economy is expected to be strong next year, commodities prices are expected to remain stable. Iron ore prices fell in May, but rose by 5.0 percent in June “in the month of June.”
“We expect a modified, more flexible QE program to be confirmed at the RBA meeting in July, which might allow for slower purchases if the economy improves. That would be the most favorable for the Australian dollar, and it would reinforce our notion of gradual, mild appreciation.”/n
