With inflation talks and a resurgence of Covid infections, the USD has gone on a strong run of late. Global stock markets have been hurt with a heavy risk off sentiment resulting in a flood back to “safe havens”.
Banks are still forecasting high 0.70’s for AUDUSD in the medium term which is interesting and as we’ve come to learn over the last 12 months cannot be relied upon.
At the bottom is a chart of the past 12 months performance and we are currently around an 8-month low.
For Importers (USD buyers) some form of hedging that takes advantage if the rates move higher in line with forecasts, in this market looks to be the safest bet, as currencies and markets as a whole are sitting on a knife edge.
For Exporters (USD sellers) it does feel like the market sentiment is in your favour, but if forecasts such as NAB/BNZ of 0.80+ come to fruition then you will wish you booked some hedging at current levels. So again, some form of hedging that takes advantage of a move lower in the rates, would be the safest bet as things currently stand.
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Yohan Huria – Business Development Manager for AFEX
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