Westpac lifted its Australian dollar forecast to US82¢ by the end of 2021 and US85¢ by mid-2022. The bank cited a steepening global yield curve, the outlook for commodity prices and likely ongoing solid momentum in China.

“As usual there are always risks principally related to the global vaccine
rollout; policy in China and the US fiscal stimulus,” chief economist Bill Evans said. “For Australia we are less uncertain, with fiscal and monetary policy likely to remain supportive of growth throughout 2021.”

Westpac lifted its forecast for 10 year US Treasuries by end 2021 from 1.2 per cent to 1.5 per cent.

“Given the expectation that the RBA will maintain its QE program but scale it back in October to $50 billion we expect the bond spread to settle at around 5 basis points by year’s end, pushing Australian 10 year bond rates out to 1.55 per cent (from the November forecast of 1.25 per cent),” the economist said.