Bank of America recently released its latest outlook for the Australian dollar. The bank stated, "We will continue to see the Australian dollar gradually rise in the coming quarters

Analyst Oliver Levinston said that the interest rate differential between Australia and other regions will continue to be a particularly important driving force for the Australian dollar, and the main reason why the AUD/G10 forex cross may rise before the end of the year

G10 cross "refers to the exchange rate of non US dollars and Australian dollars, which may include the exchange rates of GBP/AUD and EUR/AUD.

Due to the Australian Federal Reserve cutting interest rates later than the Federal Reserve and at a slower pace, Bank of America believes that AUD/USD will continue to rise.

Levinston said, "We expect the Reserve Bank of Australia to be the last central bank in the G10 (excluding Japan) to lower policy rates. Australia's labor market remains strong, and the rate of inflation decline will not be fast enough to prompt the Reserve Bank of Australia to cut rates in the short term

After the annual CPI rate in Australia fell from 3.8% in June to 3.5% in July, the Australian dollar was boosted last week, but this figure was higher than the market expectation of 3.4%, supporting the view that the anti inflation process is slow.

At the same time, the market expects the Federal Reserve to cut interest rates in September, and even believes that a 50 basis point rate cut is possible, which may put pressure on the US dollar. At the same time, the increasing possibility of the Federal Reserve cutting interest rates has boosted investor confidence, which is the traditional driving force behind the Australian dollar.

However, any short-term upward trend in AUD/USD will not be fast or smooth sailing.

Levinston said, "If the economic outlook in Asia does not improve, we are not willing to predict that the Australian dollar will reach a level of 0.70 against the US dollar in 2024

He said that the rise of the Australian dollar may be limited by Australia's weak export prospects to Asia, as Australia is facing structural resistance, including rising tariffs imposed by Europe and the United States on goods from some Asian countries, as well as difficulties in the Australian real estate market.

Bank of America predicts an AUD/USD of 0.69 at the end of 2024 and a forecast of 0.72 at the end of 2025.