The Australian dollar has rebounded in June despite the ongoing slide in commodity prices. The currency’s recovery has probably been due to a subtle shift in investors’ expectations about the relative prospects for monetary policy in Australia and the US, as well as to the demand for a refuge from the turmoil in Europe. Nonetheless, we are sticking for now with our forecast of a decline in the USD/AUD exchange rate from its current level of around parity to 0.90 by the end of the year. We also continue to forecast a subsequent rebound in the exchange rate to 0.95 by the end of 2013.
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