AUD/AED Outlook:
The Australian Dollar (AUD) is likely to increase as it trades above its recent average and is close to recent highs. The stronger AUD is supported by ongoing inflation concerns in Australia and a weakening US dollar.
Key drivers:
- Rate gap: The recent increase in interest rates by the Reserve Bank of Australia (RBA) has made the AUD more attractive compared to the stable AED, which is pegged to the US dollar.
- Risk/commodities: Rising commodity prices, particularly gold, have boosted Australian exports, further supporting the AUD.
- Economic indicators: Recent improvements in China’s manufacturing data suggest a positive outlook for Australian exports, enhancing demand for the AUD.
Range:
Expect the AUD/AED to hold above its recent average, with potential volatility as it tests the upper extremes of its recent range.
What could change it:
- Upside risk: A further rate hike by the RBA could strengthen the AUD even more.
- Downside risk: A shift in global risk appetite due to geopolitical tensions could pressure the AUD downward.
