Bullish indicating open at $55-$60, IPO prices at $37
A report from Bank of America (BofA) analysts highlighted a bullish outlook for the Australian dollar (AUD), albeit tempered by the anticipation of outcomes from U.S. trade investigations. The AUD’s sensitivity to the scope and size of potential U.S.-China tariffs is noted as a significant factor in its valuation.
BofA maintains its forecast for the USD/CNY exchange rate at 7.50 for the first quarter and 7.60 for the second quarter of 2025, despite current efforts by China to prevent the devaluation of its currency.
The report also mentions that a possible tariff shock and the devaluation of the Chinese yuan (CNY) could pose a downside risk for the AUD in the near term. This is particularly relevant as the bank’s positioning indicators suggest that long positions in the AUD are currently the most crowded among the G10 currencies.
Despite these concerns, BofA reaffirms its year-end forecast for the AUD at 0.68. However, the firm is closely monitoring the pending results of the U.S. trade investigations and subsequent tariff announcements, which are expected to be disclosed by April 2, 2025. The outcome of these investigations could have a significant impact on the currency’s performance.
Investors and market participants are advised to stay attuned to updates regarding the U.S. trade investigations, as these findings will likely influence the AUD’s trajectory in the coming months. The report underscores the interconnectedness of global trade dynamics and their effect on currency valuations, with a particular emphasis on the relationship between the US, China, and Australia.
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