AUD/AED Outlook: Slightly positive, but likely to move sideways, given the rate is above its recent average and lacks a clear driver pushing it higher.
Key drivers:
- Rate gap: The Reserve Bank of Australia is considering rate hikes to combat rising inflation, while the UAE Dirham's rate is stable due to its peg to the US dollar.
- Risk/commodities: Recent positive economic data from China, Australia’s largest trading partner, supports the AUD, as it raises demand for Australian exports.
- One macro factor: The upcoming Australian Consumer Price Index report could provide further insight into inflation trends, which may impact monetary policy direction.
Range: AUD/AED is likely to drift within its recent range, influenced by ongoing economic developments without testing extremes.
What could change it:
- Upside risk: A significantly positive shift in China's economy could increase demand for Australian exports, supporting further AUD strength.
- Downside risk: A disappointing release of upcoming economic indicators could dampen expectations for Australian economic growth, weakening the AUD.
