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Investing.com - Bank of America analysts highlighted on Monday that the Australian dollar possesses a "uniquely high beta" to gold, silver, S&P 500, and U.S. 5-year/5-year break-evens, according to a new research note.
The bank noted that Friday’s market sell-off pushed the GBP/AUD exchange rate beyond their stop-loss level, but they remain optimistic about the Australian currency’s prospects due to expected U.S.-China de-escalation.
Bank of America’s analysis indicates the Australian dollar trade-weighted index is currently approximately 4% undervalued, which they attribute to a "China risk discount" in the market.
The research firm projects significant upside potential for the AUD/JPY currency pair, forecasting a 6% increase by the end of 2025 as geopolitical tensions ease.
Bank of America also emphasized that a rally in gold prices would boost Australia’s fiscal position, noting that gold represents the country’s second most valuable goods export and would support wider swap spreads.
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