USD/AUD Outlook:
Bearish, as the rate is significantly below its recent average and near recent lows, pressured by ongoing concerns over the U.S. economic outlook.
Key drivers:
• Rate gap: The Federal Reserve recently paused interest rate cuts, while the Reserve Bank of Australia raised rates, favoring the AUD.
• Risk/commodities: The Australian dollar is strengthened by rising commodity demand, especially with robust ties to China's economic recovery.
• One macro factor: Expectations of further tightening from the RBA, following a surprising rise in Australia’s inflation, are boosting the AUD against the USD.
Range:
The USD/AUD is likely to hold within its recent range, reflecting the shaky footing of the U.S. dollar against a strengthening Australian dollar.
What could change it:
• Upside risk: A strong U.S. jobs report could reinvigorate confidence in the USD.
• Downside risk: Further negative developments in U.S. trade relations could deepen pressure on the USD.
