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- AUD/USD to remain on the back foot into the middle of the year, climbing back to 0.70 by end-2023 – Rabobank
AUD/USD to remain on the back foot into the middle of the year, climbing back to 0.70 by end-2023 – Rabobank
The AUD is the weakest G10 performing currency following what was perceived as a shift in tone from the RBA at today’s meeting. Economists at Rabobank expect the AUD/USD pair to remain under pressure near term but the Aussie is set to pick up some ground in the latter part of the year.
Change in tone
“As expected, policy-makers hiked interest rates by 25 bps. However, a change in language in the RBA’s statement meant that the market now sees the possibility of a lower peak in rates and the potential for a forthcoming pause in policy moves.”
“In our view, the Fed is set to stick with its hawkish guidance for now suggesting that AUD/USD could remain on the back foot into the middle of the year. That said, on a relative basis, the Australian economy remains fairly well positioned in terms of growth and we expect AUD/USD to pick up some ground in the latter part of the year. This forecast assumes that Fed rates have peaked by then.”
“We have adjusted our AUD/USD modestly lower and see risk of dips to 0.66 on a one to three-month view.”
“Our forecast of a move back to 0.70 at the end of the year assumes Fed funds will peak at 5.5% this year in line with our current house view.”
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