Bias: Range-bound, current AUD/PKR is not clearly above or below the 90-day average and sits in the upper half of the 3-month range.
Key drivers:
• Rate gap: The RBA is seen on a path toward higher rates as inflation risks rise, while Pakistan's policy remains cautious and financing conditions tight; this diverging path tends to keep AUD firmer against PKR.
• Risk/commodities: Commodity price swings reflect tied demand for Australia’s exports, supporting the AUD when global demand holds up, while higher import costs pressure the PKR.
• Macro factor: Australia’s CPI and employment data due in January could shift rate expectations and tilt AUD vs PKR.
Range: Expect a drift within the 3-month range, with a tilt toward the upper end if global risk appetite improves.
What could change it:
• Upside risk: surprisingly stronger Australian inflation or a hotter jobs print could cement earlier or higher rate expectations, lifting AUD further.
• Downside risk: PKR gains from improved external financing or reforms could strengthen PKR and narrow the gap.
