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Westpac: AUD/USD is set to strengthen

According to analysts at Westpac, AUD/USD will likely strengthen in the coming months.

US Treasury yields growth is now lagging behind the US dollar economic growth. That puts the sustainability of the USD rally under question. Analysts expect USD to strengthen especially versus the high-yielding currencies such as AUD and NZD.

What’s more, analysts forecast the iron ore prices to recover in early 2015. As a result, AUD fair value will increase. Overvalued Aussie won’t be a problem for the RBA anymore.

Westpac forecasts AUD/USD to hit 0.8800 by the end of 2014, 0.9000 by June 2015 and 0.9200 by the end of 2015.

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