Brief comment via CBA from a note last week.
- The Aussie dollar is expected to rise over 2022 to reach US78-80 cents by the December quarter on the expectation that the Reserve Bank starts to ‘normalise’ interest rates.
CBA also give a heads up to a 'key uncertainty' in Australia next year:
- A key uncertainty could be the outcome of the Federal election due in May. While the opposition Labor Party is currently well ahead in most opinion polls, a tight result or even a ‘hung’ parliament could potentially impact investor sentiment. But a centre-left government, as evidenced in the US, could see a big boost to government spending.
A big boost in fiscal support for the Australian economy, to the extent it'd accelerate progress on RBA targets on inflation and unemployment could, in turn, accelerate RBA policy normalisation and thus provide further tailwind support for the AUD.
