As the AUD OIS curve still hints at a rate cut by year-end, ING’s top FX analysts Francesco Pesole and Chris Turner point out the potential for the AUD to hit 0.68 in the near future.
According to Pesole and Turner, achieving this level is contingent on Australian inflation easing and a significant cut by the Federal Reserve. However, the Reserve Bank of Australia’s stance on rate hikes presents a contrasting view, suggesting the Aussie dollar could see strength in the short term.
While the RBA’s policy tightening could have been more aggressive, the possibility of another hike remains if there is a notable acceleration in monthly CPI figures. This, coupled with the market’s optimism for playing risk-on waves, positions the AUD as a favorable currency for the summer months.
Despite the potential for 0.68 to be reached soon, the analysts caution against a overly positive outlook in the medium term due to uncertainties surrounding a potential Trump re-election.
Analysis: The Australian Dollar’s performance in the coming months hinges on various factors such as inflation trends, central bank policies, and geopolitical events. Investors should closely monitor economic indicators and political developments to make informed decisions about their investments in AUD-related assets.