AUD/USD Outlook: Slightly positive, but likely to move sideways, as the rate is currently above its recent average but lacks a clear driver for significant change.
Key drivers:
• The Reserve Bank of Australia is facing inflation pressures, with expectations of a potential rate hike after December's CPI surged beyond the target range.
• Commodity prices have retreated, impacting the AUD, as the currency is closely tied to exports like iron ore and coal.
• Ongoing trade tensions and tariffs imposed by China may weaken demand for Australian exports, affecting the currency's stability.
Range: The AUD/USD is likely to drift within its recent range as it balances between upward pressure from potential Australian rate hikes and downward influences from global market concerns.
What could change it:
• Upside risk: An unexpected hawkish stance from the RBA could strengthen the AUD significantly.
• Downside risk: A further decline in commodity prices or heightened geopolitical tensions could push the AUD lower.
