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AUD/USD forecast for 02.06.2020

June 2, 2020

June 2, 2020

Aussie works wondersDmitri Demidenko

In March, no one could believe that the AUD/USD would be 24% up over

2.5 months

Australia, unlike other countries, averted recession 12 years ago. If it doesn’t slide into a recession in 2020, it will be a miracle. The chance, however, is small. According to Bloomberg forecasts, Australia’s GDP contracted by 0.3% Q-o-Q in the January-March period. However, there is a small chance that the Australian economy will avoid recession due to the improvements in exports. Most analysts were sure that the Australian economy will face a deep downturn in the April-June period. However, a technical recession means the GDP contraction over the two successive quarters. Do miracles happen in Forex?

However, if Australia doesn’t avoid a recession, its quick rebound will support the [AUD/USD][1] bulls. In one of [previous AUD analytical articles][2], I noted that the lockdown in Australia is not so strict as in the USA and Europe, which leaves the hope for the V-shaped recovery of Australia’s GDP suggesting the relevance of the AUD purchases. The RBA meeting in June becomes further evidence that the policy is correct. According to Phillip Lowe, the depth of the downturn will be less than it earlier expected. First, many companies are opening earlier than it was planned. Second, the negative fallout is managed by the fiscal and monetary stimulus.

The Reserve Bank of Australia left rates at 0.25% and confirmed its pursuit of the yield curve control is correct. RBP was buying bonds for just two days. The RBA measures have been enough to calm down the financial markets. The important domestic drivers for the [AUD/USD][1] rally are the fact that investors do not expect the RBA monetary easing and the GBP drop is less deep than it was earlier expected.

Among the foreign growth drivers for the Aussie is the price growth for the S&P 500 and iron ore, as well as the hopes for a soon recovery of China’s economy. China’s manufacturing PMI has been above 50 for already several months, which signals economic expansion. Nonetheless, Australia faces the problem of weak foreign demand, which results in a drop in export orders.

Dynamics of AUD/USD and S &P 500

![LiteForex: AUD/USD forecast for 02.06.2020][3]

Source: Trading Economics.

In the [forecast offered in April][4], I bet on the AUD purchases following the investment idea that China’s economy should recover quicker than the US and euro area. This factor has been partially priced in the [AUD/USD][1]. Besides, if the Australia-China trade relations deteriorate and the US-China trade war is escalated, the AUD can well start a correction down.

Because Australia was going to investigate COVID-19 laboratory origin, the Chinese media called Australia “a giant kangaroo that serves as a dog to the US” or “chewing gum stuck on the sole of China’s shoes”. Furthermore, there are talks that China is willing to halt buying US farm products due to Washington’s sanctions. The [first target][4] for the [AUD/USD][1] longs at 0.675 has already been reached. The second target can be now raised from 0.69 to 0.72, it is now relevant to buy the AUD/USD on the corrections down. It is now the right time to take part in the [LiteForex contest][5] with excellent prizes.

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Price chart of AUDUSD in real time mode

![Aussie works wonders][8]

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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  1. my.liteforex.com/trading/chart?symbol=AUDUSD&returnUrl=true
  2. www.liteforex.com/blog/analysts-opinions/forex-is-exiting-lockdown/
  3. cdn.liteforex.com/cache/uploads/blog_post/fundamental_analysis/audusd-spx-02-06-20.jpg?w=30&s=89c1e566b264eaea02c7a0b7e666234a
  4. www.liteforex.com/blog/analysts-opinions/will-the-aussie-get-the-better-of-bears/
  5. www.liteforex.com/contests/dream-draw/
  6. my.liteforex.com/?category=analysts-opinions&slug=aussie-works-wonders&openPopup=%2Fregistration%2Fpopup&utm_source=blog&utm_medium=article&utm_campaign=bonus
  7. my.liteforex.com/deposit/?category=analysts-opinions&slug=aussie-works-wonders&promo_code=BLOG&utm_source=blog&utm_medium=article&utm_campaign=bonus
  8. cdn.liteforex.com/cache/uploads/blog_post/fundamental_analysis/liteforex-blog-audusd-02-06-20.jpg?q=75&w=1000&s=8f31cb6588d1c620fa91c573ac3378b8