Further support for AUD and NZD is expected from a potential medium-term recovery in China.

We raise our end-2024 forecasts for AUD/USD to 0.70 from 0.65 and NZD/USD to 0.63 from 0.59.

A recovery in capital expenditure (CAPEX) in Australia, now aligned with other commodity exporters, supports a stronger AUD. Higher commodity prices could enhance AUD appreciation due to increased production capacity. Relative to other G10 currencies (excluding Japan), fewer rate cuts are priced in for the Reserve Bank of Australia (RBA), making the interest rate channel more supportive for the AUD.