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The AUD has broken through a number of key levels in search of new-highs as a steady stream of vaccine headlines have balanced the distribution of news flow, acting as a modest tail-wind for the aussie. AUD/USD is trading around the 0.72 level and economists at ANZ Bank expect the pair to move around this level, a test of the 0.75 mark is on the cards though.

Key quotes

“On a domestic front, virus outbreaks across Victoria and New South Wales will challenge the prior view that Australia emerged from COVID-19 in a stronger position relative to peers. Instead, a sustained period of slowdown is now likely, challenging key service sectors in addition to the prolonged hit expected from a lack of migration and tourism.” 

“For the RBA, we expect a sustained period of currency overvaluation to draw a pronounced policy response from the central bank, however with fundamental value continuing to drift higher, the RBA will likely have to remain on the sidelines.” 

“We maintain our forecast track for AUD/USD near current levels, reflecting a range bound view of the currency and the at-times patchy growth environment expected through 2020. However, we also still expect that the AUD/usd can test as high as 0.75 in this range.”