MUFG Bank Analysts, continue to see a commercial idea in the longs of the AUD/USD with a target at 0.7895 with a stop loss at 0.7460. They note that global optimism should push the Australian dollar to new cycle highs.
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“Better vaccination prospects in Europe and positive growth prospects in China should allow for a slow rise in AUD / USD. For this reason, the Bloomberg Commodity Price Index has risen sharply to its highest level since mid-2018, and global equity markets to new all-time highs. The combination of improving Australia’s terms of trade and risk-seeking behavior continues to be favorable for the AUD. “
“Recent internal data flow from Australia has started to disappoint expectations, tentatively suggesting that the recovery is starting to lose some momentum to the upside. In particular, core inflation fell to a new record low. It has reinforced expectations that the RBA will extend QE beyond September, although it is probably too early for a policy announcement at next week’s meeting. They pose a modest downside risk to the AUD, and in any event, any downward correction would likely be modest given global optimism and positive terms of trade lately. “
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