AUD to Strengthen in 2024 – UBS
(20 February 2024 – Australia) UBS forecasts the Australian Dollar (AUD) will appreciate by ten percent from current trading levels at US$0.65 to US$0.72 by the end of 2024.
The Aussie Dollar is expected to benefit from the Federal Reserve reducing interest rates four times in the next 12 months, dragging on the greenback and sending the US 10-year bond yield to 3.5 percent according to UBS Global Wealth Management. The RBA will be the last G10 central bank to lower rates due to robust economic fundamentals and persistent inflation.
Westpac has a more mixed outlook for the Australian dollar in the year ahead after the Aussie trended weaker overall in 2023, averaging around 66 cents against the USD compared to over 69 cents in 2022.
“The Aussie dollar is one of the better trades to be made this year largely because of the fact that we think it is very, very undervalued” commented UBS Global Wealth Management’s Regional Chief Investment Officer, Kelvin Tay, who oversees US$645 billion in assets under management (AUM).
“Another driving force behind A$ moves is the economic performance of China – Australia’s most important trading partner. The Aussie does have other factors that are very supportive. Australia’s large trade surplus, swelled by bumper earnings in the mining industry, contrasts with a trade deficit in New Zealand, while the fiscal position is also stronger” stated Westpac Senior Currency Strategist Sean Callow.
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