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The AUD/USD pair dropped to its lowest level in nearly a month at 0.7179 on Monday and economists at Rabobank are seeing a change of tone in the aussie. They forecast AUD/USD trading at 0.68 on a six-month view.

Key quotes

“While the AUD could be undermined by signs of a more dovish RBA and fears about the outlook for global growth, we expect that the safe-haven USD will be lifted by short-covering. This is likely to be triggered by fears of another wave in COVID-19 in Europe and beyond, uncertainty around the US election, disappointment about the timing and size of US fiscal stimulus and/or China-related tensions are all risk factors.”

“The world is becoming accustomed to the notion that measures to contain COVID-19 will be with us for longer. Several central banks in the G10 have touted the idea that a less severe 2020 economic downturn than feared in May will be followed by a weaker recovery in the coming years. Not only does this not bode well for global demand and commodity prices but it could trigger further policy responses from a variety of central banks including the RBA.” 

“We see scope for AUD/USD to pullback towards 0.71 on a three-month view and to fall to 0.68 in six months.”