Mitsubishi UFJ: It's time to bet on the Australian dollar, look up at 0.7158!
Mitsubishi UFJ stated last week that following recent policy changes in the United States and China, the bank is launching a "bullish AUD/USD trading strategy" based on "building investor optimism about global economic growth prospects".
The recent 50 basis point interest rate cut by the Federal Reserve has provided more space for domestic policy makers in China to increase support for the Chinese economy.
Mitsubishi UFJ stated that China's "comprehensive support measures and commitments to increase efforts when necessary" can boost confidence, which is a positive development for investor sentiment and indicates that China will be more determined to promote economic growth. This more positive view has pushed the Australian dollar to break through the important resistance level of around 0.6900 against the US dollar, which is the high point of the past few years.
Strategists indicate that AUD/USD is expected to further rise to the February 2022 high of 0.7158.
Mitsubishi UFJ Financial believes that in the short term, commodity currencies with strong demand from China, such as the Australian dollar, should have a boosting effect. Increasing fiscal spending or accelerating the implementation of existing plans may further strengthen the upward momentum of the Australian dollar in the coming weeks.
According to Mitsubishi UFJ, the main downside risk for betting on a strong Australian dollar in the coming week is the release of a much stronger than expected US job market report, which could challenge market expectations for a faster rate cut by the Federal Reserve.
AUD/USD daily chart
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