AUD/USD: Commodity prices have not been a drag yet – Westpac

The Australian market will increasingly refocus on the outlooks for its main commodities, posing downside risks over the medium-term, per Westpac Institutional Bank.

Key quotes

“Iron ore prices have help up well, but that’s mainly due to supply bottlenecks (Vale dam disaster, weather damage to ports, COVID-related shipping constraints). Once those have been cleared, there’s potential for iron to more closely reflect the deterioration in demand. So too for coal, and with a perhaps longer lag, agricultural commodities.” 

“Multi-month, we hold a negative bias for AUD/USD, targeting as low as 0.59.”