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Last week, the AUD/USD toyed with a more material break below 0.7600. A move to the 0.7500 mark is on the cards, however, in the long-term, economists at Westpac forecast the aussie at 0.79 by the end of the second quarter.

Key quotes

“An extension to 0.7500 or below is plausible so long as the US dollar draws support from an economic rebound fuelled by a huge fiscal injection and rapid vaccine rollout. But our base case remains for the Aussie to trend higher, to 0.79 by end-Q2 and higher again in H2 21.”

“Australia continues to run historically very large trade surpluses, with Q1 set to be the eighth consecutive quarter of current account surpluses. A$ should benefit from anticipation of a synchronised global recovery over 2021, especially in Asia.”  

“Australia’s coronavirus containment is allowing substantial freedom of economic activity though the RBA’s dovish stance should limit the upside on yields and thus on A$.”