10 Jul The five reasons why the $A is likely to rise further – if recession is avoided
Key Points
- After a soft patch since 2021, there is good reason to expect the $A to rise into next year: it’s undervalued; interest rate differentials look likely to shift in favour of Australia; sentiment towards the $A is negative; commodities still look to have entered a new super cycle; and Australia is a long way from the current account deficits of the past.
- There is a case for Australian-based investors to remain tilted a bit to hedged global investments but while maintaining a still decent exposure to foreign currency.
- The main downside risks for the $A would be if there is a recession or a new Trump trade war.
