AUD/USD: Australian fundamentals are relatively strongly positioned – Rabobank

According to analysts from Rabobank, the AUD/USD pair could drop a little further in the near term, but they see Australian fundamentals strongly positioned, favoring a rebound later. They forecast AUD/USD at 0.64 in three months and at 0.65 in six months. 

Key Quotes: 

“In early October the RBA was the first major central bank to return to a more ‘normal’ 25bp rate hike. Although the Bank had signaled it was considering such a move, in view of the prevalence of high inflation levels, the decision was still a surprise to the market. The reason given by policy makers for reverting to a 25bp incremental move was “that the cash rate had been increased substantially in a short period of time and the full effect of that increase lay ahead.” It would appear very likely that policy makers were concerned about the impact on the affordability of mortgages from this year’s series of rate rises.”

“Given our expectation that USD strength is set to persist, we see risk of AUD/USD dipping back a little further in the near-term. However, in terms of relative growth prospects, terms of trade and current account position, Australian fundamentals are relatively strongly positioned.”

“We favour the AUD vs. both the EUR and the GBP and see scope for AUD/USD to move towards 0.65 early next year.”