Analyst from ANZ expect the AUD underperformance to continue and they still target AUD/USD at 0.64 by year-end. Key Quotes: “A glance at the AUD/USD rate at the beginning of the week and then again at the end could have most observers forgiven for thinking nothing happened. This would be a mistake, as while the AUD remained stable against the USD, it underperformed against most other crosses. In particular, the move in JPY was a four standard deviation event which drove AUD/JPY to cycle lows below 80.” “The move was due to a combination of two factors. First, the USD has been somewhat undermined by growing expectations that the Fed may reverse its decision to tighten policy in the face of current market turmoil. Secondly, the market started to question the efficacy of monetary policy as an offset to global market uncertainty.” “In the near term, we question the first factor. In the Fed’s testimony in Washington last week, Chair Yellen did highlight that there were some growing external downside risks. However, these remained ‘risks’ and were not a feature of the Fed’s central case scenario, which still envisages further tightening. This means that the recent weakness in the USD, which likely explains the resilience in the AUD, is unjustified.” “We remain structurally bearish on the AUD, targeting USD0.64 by December 2016.” For more information, read our latest forex news.