(Bloomberg) -- Australia’s dollar broke through the key 70 U.S. cents mark on expectations markets have witnessed the worst of the coronavirus’ carnage on the global economy.
The Aussie jumped as much 0.9% on Friday to 70.04 U.S. cents, the highest level since early January when the virus outbreak had yet to explode into a pandemic. It has risen 27% after sliding to a near 18-year low in March, and is seen as a favored asset to buy among investors cheering the re-opening of economies from Singapore to Germany.
The Aussie could rise to 75 U.S. cents next year as it benefits from a cocktail of supportive monetary and fiscal policies, improving risk sentiment and the nation’s record trade surplus, Thomas Nash, a strategist at HSBC Bank Australia, wrote in a note. “Buying AUD in the depths of recession has been profitable in the past -- this time should be no different.”
The currency also received an inadvertent boost from Reserve Bank of Australia Governor Philip Lowe, who refrained from talking down the currency’s strength at a recent policy meeting.
The rising trend is likely to continue, according to Australia and New Zealand Banking Group Ltd.
“The rally has come from a position of currency undervaluation and is aligned to improvements in both risk appetite and global growth prospects,” ANZ strategists including Daniel Been wrote in a note. “As a result, at this stage, the move is unlikely to warrant attention from the RBA.