According to analysts from Rabobank, the outlook for the AUD/USD pair will continue to depend significantly on the broad performance of the US dollar. They see the pair with room for a correction lower in the months ahead.
Key Quotes:
“The fact that the RBA is considered to be perhaps the least dovish central bank in the G10 universe is a factor behind the AUD’s solid position.”
“The RBA’s expectation that the marked weakness of the Q1 CPI inflation data will only be temporary and the comments regarding the position of the AUD in its recent policy statement suggest that the RBA is not uncomfortable with the current position of the AUD. However, fears that the Victoria lockdown will alter projections regarding Australia’s economic recovery, combined with tensions with China suggest that the relative strength of the AUD may not be welcomed by the RBA for much longer.”
“The near-term outlook for AUD/USD will continue to depend significantly on the general tone of the USD. Even though Australia’s effective exchange rate is far more contained than AUD/USD, the RBA is unlikely to welcome further significant gains for the AUD given risk to the economy and the current weak tone of CPI inflation. In our view USD weakness is currently looking over-extended and this supports our expectation that AUD/USD has room to correct lower in the months ahead.”
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