USD/AUD Outlook:
The USD/AUD rate is currently below its recent average and near recent lows, indicating a bearish trend. The ongoing tariff uncertainties from the US are weighing on the USD, while the AUD is benefiting from supportive factors like rising commodity demand.
Key drivers:
• Rate gap: The Federal Reserve's dovish monetary policy contrasts with the Reserve Bank of Australia's tightening stance, leading to weaker USD demand.
• Risk/commodities: Recent rises in commodity prices, particularly from increased demand due to China's economic recovery, support the Australian dollar.
• One macro factor: Australian consumer confidence has surged, which may boost the AUD's resilience amidst global uncertainties.
Range:
The USD/AUD rate is likely to drift within its recent 3-month range, reflecting limited upward momentum given the current pressures.
What could change it:
• Upside risk: A shift in US economic data that shows unexpected strength could lift the USD.
• Downside risk: Further tariff escalations or geopolitical tensions that intensify could exacerbate USD weakness.