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Rabobank analysts think that the AUD/USD pair could recover some ground and trade choppy in the 0.7700-0.7800 range on a three-to-six-month horizon.

Key quotes

“Higher bond yields in the US and the perception that the Fed is not yet uncomfortable with this move to have played into the hands of other G10 central bankers. The gains in the USD that have resulted from the move in US yields has meant currency depreciation elsewhere.”

“On top of this, the RBA’s commitment to its accommodative monetary policies, bad news on the topic of trade tensions between China and Australia and a re-think in the market about the degree of hostility in the US-China relationship have all contributed to the move in AUD/USD back to its February low.”

“Following the recent strengthening in the USD, it is our expectation that the greenback will soften across the board in Q2.  Consequently, we see scope for AUD/USD to recover some ground and we look for choppy trading in the 0.77/0.78 area on a 3-to-6-month horizon.  We retain our forecast that a combination of accommodative RBA policies and China trade tensions are likely to keep AUD/USD below 0.80 this year.”