AUD/USD: Risking a return to 0.58-0.59 – Westpac

AUD/USD is set to remain prey to global risk sentiment, occasionally probing 0.6150/70 but overall biased back towards 0.58 multi-week, per Westpac Institutional Bank.

Key quotes

“Australia’s proposed JobKeeper Payment is a radical plan befitting an extraordinary hit to the economy. The government should save a large number of jobs and limit the contraction in GDP.”

“We expect a shocking -8.5% fall in output in Q2, even as the much-pledged return to surplus becomes a deficit of -5% of GDP in the year to June, blowing out to -10.5% in 2020/21, the largest deficit since WW2.”

“AUD/USD’s bounce extended further than we expected, touching 0.62. Yet our bias is unchanged, looking for rallies to the 0.61 handle to fail, risking a return to 0.58-0.59 initially.”