fxstreet.com 17 Feb, 2021 10:45 am

Improving terms of trade support stronger aussie – MUFG

Improving terms of trade support stronger aussie – MUFG
The AUD/USD pair remains close to its recent highs around 0.7750 with only limited negative impact so far from the rise in US yields. The Reserve Bank

The Reserve Bank of Australia (RBA) argues that the aussie would be materially stronger without loose policy as the Australian dollar would normally have strengthened more on the back of the improving outlook for global growth, per MUFG Bank.As a result, yield spreads have not moved in the US dollar’s favour against the Australian dollar.” “The RBA estimates that their policy easing measures have contributed to the Australian dollar being as much as 5% lower than otherwise in trade-weighted terms.The external environment on the whole remains supportive for the Australian dollar alongside relative domestic cyclical momentum.

” “Downside risks for the Australian dollar would increase if the ongoing rise in US yields was to trigger broader correction lower in risk assets.At the same time, the Australian dollar could prove sensitive to signs of ongoing tensions between the US and China under the Biden administration.

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