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The Reserve Bank of Australia might herald the unwinding of stimulus in its July meeting, as reported by economists at ING. They expect the AUD/USD pair to march forward through the rest of the year and target the aussie at 0.81 by end-2021.

Looking beyond the usual risks

“On 6 July, the RBA may announce it will not roll-over its 3-year yield-curve-control scheme beyond the April 2024 bond. The unwinding of stimulus should however be very gradual, and while the shape of QE may be tweaked, the size of it should not be materially scaled back just yet. Any positive impact on AUD may be relatively contained for now. Jobs data is set to hold some importance for monetary policy decisions.”  

“External downside risks remain plentiful, from a potential correction in iron ore prices (we still think prices are unsustainable) to more Australia-China trade tensions.”

“We think a broadly supportive risk environment can continue to put a floor below AUD/USD: we target 0.81 by year-end.”