Kristoffer Lomholt, Analyst at Danske Bank, sees the Aussie dollar deprecaiting towards the 0.7100 handle in the medium term. Key Quotes “The stabilisation in global risk appetite and the latest surge in iron ore prices have sent the cross markedly higher”. “The move, however, seems overdone according to our model estimates based on relative rates, risk sentiment and commodity prices”. “Also the ‘aussie’ appreciation significantly challenges the economy’s transition phase and we now expect a 25bp cash rate reduction in H2”. “Finally, we expect higher US rates to weigh on the cross going forward. In light of the latest move we revise our forecasts higher but maintain the same profile. We forecast AUD/USD at 0.74 in 1M (from 0.70), 0.73 in 3M (0.69), 0.71 in 6M (0.68) and 0.71 in 12M (0.68)”. For more information, read our latest forex news.