Analysts from Lloyds Bank expect the AUD/USD to continue to consolidate around current levels, moving gradually toward 0.78 by year-end. Key Quotes: “In recent weeks AUD/USD has consolidated in a relatively tight 0.74 – 0.77 range. The currency pair has followed risk sentiment and changes to US policy rate expectations. Relatively dovish comments from Federal Reserve officials, primarily Chair Yellen, triggered weakness in the USD.” “However, AUD has subsequently come under pressure, as commodity prices – particularly base metals – have resumed their declining trend. Despite the government’s pursuit of a more diversified economy, the correlation between the currency pair and industrial metals is above 0.80. Recent economic data have been mixed. Although retail sales again underperformed expectations in March, the unemployment rate improved to 5.8% (although this was partially driven by a fall in the labour force).” “It is noteworthy that, despite the appreciation in AUD so far this year, RBA Governor Stevens has chosen to not actively talk down the currency in recent speeches. As long as the global risk environment remains stable, we favour AUD/USD consolidating around current levels, with gradual appreciation toward 0.78 by year-end.” For more information, read our latest forex news.