AUD/USD to trade modestly lower in 12M at 0.67 – Danske Bank

The reopening in China has continued to support AUD in early 2022, but relative rates have been a headwind. Economists at Danske Bank expect the AUD/USD pair to move gradually lower over the coming months.

AUD is well positioned to gain support from Chinese reopening

“We still think AUD is well positioned to gain support from Chinese reopening and the less negative global growth outlook.”

“Higher commodity prices are supportive for AUD all else equal, but they also increase the risk of the Fed turning more hawkish.”

“We continue to look for modestly lower AUD/USD in 12M in line with our view of broad USD strength, but AUD could still gain vis-à-vis other cyclically sensitive currencies, like EUR.”

“Forecast: 0.69 (1M), 0.68 (3M), 0.67 (6M), 0.67 (12M).”