Australia Macro Service > Australia Research Briefings

AUD stabilizing after wild ride

After falling sharply in late March, the AUD has recovered all of the lost ground. Improved market sentiment about the global economic outlook and substantial fiscal and monetary policy support (particularly from the Federal Reserve) have provided some support, and commodity prices have been favourable with a rebound in iron ore prices driven by the recovery in activity in China. Relatively favourable domestic conditions have also played a part. The successful public health response to the crisis, less stringent lockdown conditions and the early relaxation of restrictions means Australia’s economy is expected to outperform other developed economies this year. Over the longer term, the economy is expected to continue to this trend, underpinned by encouraging fundamentals (particularly demographics). This is expected to lead to a further modest appreciation in the AUD over the medium term.

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