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Analysts say that now is the right time for buyers of the Australian dollar, as it gains impulse despite periodic market volatility.
On Wednesday, there was a favorable situation for AUD buyers. The AUD/USD pair increased by 0.33%, reporting to the level of 0.7726. On Thursday morning, the indicated instrument continued to move in the current range around the level of 0.7732.
Several factors such as the US dollar's weakening, US Treasury Secretary Janet Yellen's unexpected statements about the possibility of raising the key rate, as well as the Reserve Bank of Australia (RBA)'s decision strongly supported the Australian dollar. It can be recalled that the regulator kept the key rate and the yield on 3-year Treasury government bonds at 0.10% on Tuesday. According to Philip Lowe, Governor of the Central Bank of Australia, there are no conditions for raising rates yet, despite the early recovery of the national economy.
Based on the current plans of the RBA, the department will keep the key rate unchanged until the real inflation rate reaches 2%-3%. For this to happen, the Australian labor market must be strengthened, which may lead to growth in wages. Experts believe that such a scenario is possible only by 2024. Along with other decisions, RBA representatives announced revised forecasts for GDP and unemployment rate. According to updated reports, GDP is expected to rise to 4.75% this year, from the previous 3.5%, while the unemployment rate will decline to 5% from the previous 6%.
In this situation, experts recommend giving long positions on the AUD/USD pair. The improvement in global market sentiment is in favor of the Australian dollar buyers. Traders and investors are also optimistic about the outlook for the global economy amid the widespread lifting of quarantine restrictions caused by COVID-19.
According to NAB Research, the nearest target for the AUD/USD pair is the level of 0.7800. Its currency strategists highlighted that this instrument looks currently undervalued. Therefore, the current month can be difficult for the pair, whose dynamics is largely determined by the state of the dollar. It can be recalled that the US currency is constantly experiencing overloads caused by political and economic factors.
In this case, NAB Research forecasted that the AUD/USD pair will manage to reach the level of 0.8000-0.8500 in the second half of 2021 - the first half of 2022. However, the transition to a higher trading range, the intermediate stage of which will be around 0.8000 by mid-2021, is possible only in the case of stable prices for hydrocarbons amid a relatively soft dollar exchange rate.
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