The National Australia Bank released its updated currency forecasts earlier today, and, putting them somewhat in the contrarian corner, they expect the US dollar to struggle in the short-to-medium term.
“The forecast revisions are driven in large part by the contention that the US dollar is set to further struggle in coming months on loss of confidence in the passage of meaningful fiscal policy changes before much later in the year, the pull-back in US bond yields, and assuming the Fed does not raise rates before June,” said Ivan Colhoun, chief economist at the NAB’s markets division.
Here’s the bank’s updated forecasts:
On the Aussie dollar, a firm favorite with many currency traders, the NAB has lifted its near-term forecasts, but still expects it to trade lower against the US dollar over the remainder of 2017.
“With commodities, global growth and risk sentiment all travelling much better than envisaged in our previous forecasts such that our fair value model estimate is currently pegged near 0.78, we have lifted our forecasts to now show 0.77 for end Q1 (from 0.73), to 0.75 for Q2 (from 0.73) and to 0.73 for Q3 (from 0.70),” says Colhoun.
The NAB still sees the AUD/USD finishing the year at 70 cents.
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