AUD/USD to climb toward 0.77 by end-2016 - Lloyds  Bank

Analysts from Lloyds Bank expect the AUD/USD  pair to trade higher near year-end supported by economic data from Australia.

Key Quotes:

“After reaching a new year-to-date high of 0.7835 in late April, AUD/USD was under sustained pressure until the end of May – falling almost 9%, to a low below 0.7150. The move was mainly driven by rising expectations of a near term US policy tightening over this period. However, the most recent US payrolls report all but ended the chance of the Federal Reserve tightening this month, triggering a sharp move higher in AUD/USD. The rebound in AUD extended after the RBA left interest rates unchanged at its latest monetary policy meeting.”

“As a result of the convergence of policy expectations, the currency pair is now at a mid-range level around 0.74. Recent Australian data have been strong – the unemployment rate (5.7%) and Q1 GDP (3.1% on an annualised basis) were both stronger than consensus and the trade deficit narrowed substantially (from A$2.2bn to A$1.6bn) – underpinning RBA Governor Steven’s more upbeat tone recently. While inflation remains muted, and poses a risk of additional policy loosening from the RBA, we believe economic data will remain robust and forecast AUD/USD to climb towards 0.77 by end-2016.”