Aussie dollar rise stirs market debate, ASX miners to shine
Currencies are notoriously unpredictable but several factors including interest rates and geopolitics point to a higher-for-longer Aussie dollar. And one sector on the ASX could prove resilient.
A resurgence in the Australian-US dollar exchange rate has stirred debate on whether it has returned to fair value or could be set to benefit the ASX resources sector, according to market strategists and institutional investors.
The AUD touched a three-year high against the greenback above USD0.70 on Wednesday, with the move being attributed in the market to the Trump administration's erratic foreign policymaking and attack on the independence of the Federal Reserve.
While no one can be sure how long the Aussie dollar's strength will persist, Schroders Australia head of multi-asset Sebastian Mullins told Capital Brief that the supporting dynamics “are not going away”.
“You’ve got the RBA hiking rates here, inflation staying sticky, [and] growth improving, whereas the US have got rate cuts expected, a more dovish Fed potentially when Jerome Powell leaves, more push for fiscal stimulus because of the midterms, all of that pushes the US dollar lower,” Mullins said.
