Rabobank’s Senior FX Strategist Jane Foley reports that the Australian Dollar (AUD) has shifted from being a top G10 performer to ranking at the bottom, attributed to fading growth momentum and a strengthening US Dollar (USD) [1]. The AUD/USD pair has been pushed back to the 0.70 area due to USD strength, with market expectations now focused on the Reserve Bank of Australia (RBA) potentially delivering one more rate hike this year [1].
Rabobank anticipates that the RBA is likely to implement one additional rate hike in August, although this outlook is contingent on price pressures, particularly those that could arise from the closure of the Strait of Hormuz, despite a softer domestic economic outlook [1]. The bank expects the AUD/USD to trade broadly sideways in the 0.70–0.71 range over the next three months [1].
The market’s conviction in further RBA tightening has been shaken by signs of lost momentum in the Australian economy, contributing to the subdued performance of the AUD [1]. No specific market reactions or analyst opinions beyond Rabobank’s outlook are mentioned in the article [1].
CONCLUSION
Rabobank expects the Australian Dollar to remain range-bound against the US Dollar, trading between 0.70 and 0.71 over the next three months as the RBA nears the end of its rate hike cycle. The outlook is tempered by weaker domestic growth and external price pressures, with only one more rate hike anticipated.