CBA Economists recently published a research note on the outlook for the Australian dollar - below is an overview the analysis.
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CBA Economists recently published a research note on the outlook for the Australian dollar - below is an overview the analysis.
The latest FX strategy report from CBA’s Global Economic & Markets Research team forecasts the Australian dollar (AUD) will move higher against the US dollar (USD) over the next few months.
“The AUD is benefiting from a weaker USD and strong investor sentiment,” said Joseph Capurso, Head of Foreign Exchange, International & Geoeconomics.
But the gains may not last. “We expect the recovery to fade as the US economy regains momentum and Chinese growth remains subdued,” Mr Capurso said.
The report anticipates the USD will bottom out in early 2026 and then begin a gradual recovery, driven by tax cuts, modest interest rate reductions, and investment from overseas.
The fading impact of US tariffs and a rebound in economic growth are expected to support the USD through 2026 and 2027.
CommBank economists also expect oil prices to fall, and this, combined with elevated global oil stockpiles, will weigh further on the US currency.
The AUD’s performance is closely tied to China’s economic outlook. The report warns that even if Beijing announces a stimulus package to boost the economy before year-end, structural issues in property, banking and demographics will likely hold back demand for metals — dragging on iron ore, oil and gas prices.
The report flags several risks to the outlook, including political uncertainty in the US, unresolved US-China trade tensions, and potential shifts in central bank policy.
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The information presented is an extract of a Global Economic and Markets Research (GEMR) Economic Insights report. GEMR is a business unit of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945.
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