Wells Fargo Predicts an Increase of 13 Percent in the Australian Dollar by the June 2024 Quarter

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The Australian dollar is expected to grow in strength over the next four years, with a forecast of a 13 per cent gain against its US counterpart by the June 2024 quarter, according to financial services firm Wells Fargo.

Australian Financial Review

The AUD is currently trading at around US67¢ in late-night trading, and analysts at Wells Fargo believe this will jump to almost US75¢ in the first quarter of 2024 and reach US77¢ in the June quarter of 2024.

The forecast was based on projections from the global macroeconomic landscape and foreign exchange rates.

Analysts at Wells Fargo said, “With our expectation for Australia’s economy to avoid recession this year and the RBA to hold rates steady for an extended period after reaching a peak of 3.85 per cent, we believe the Australian dollar can outperform against the greenback in 2023 and into 2024.”

“Also, as of now, the global economy is set to miss the average long-term growth rate in 2024. So, while the soft landing appears achievable, corporations and investors should prepare for a low-growth environment that persists through 2024.”

Increased Demand for Riskier Assets

In addition to these positive fundamentals, Wells Fargo analysts said there could also be increased demand for riskier assets, such as commodities and currencies in general, due to expectations of an economic recovery following multiple rounds of global stimulus measures. This could further boost demand for the AUD as investors look for safe-haven assets during uncertain times.

The soft patch in Australia’s activity data will likely persist through 2024, primarily due to the continued impacts of the coronavirus pandemic on the economy. The Reserve Bank of Australia (RBA) is expected to keep monetary policy tightening to contain inflationary pressures caused by the economic recovery. This will likely cap any potential gains against its US counterpart during this time.

Despite this, analysts at Wells Fargo remain optimistic about the AUD’s prospects over the next four years due to an anticipated resurgence in demand for riskier assets like commodities and currencies as global economies reopen following multiple rounds of stimulus measures.

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