AUD/USD: Global growth recovery to support the aussie this year – HSBC
|The Reserve Bank of Australia’s latest policy announcement, maintaining its current policy settings, was widely expected. Economists at HSBC think the RBA’s statement contained both hawkish and dovish elements, albeit digested by FX markets. Despite the near-term volatility, they believe the global growth recovery should remain supportive for the AUD this year.
See: AUD/USD to reach the 0.80 mark by end-Q2 – CIBC
The near-term focus remains higher US Treasury yield volatility
“The post-meeting statement by the RBA’s Governor Philip Lowe contained both hawkish and dovish elements, but there was nothing really new for FX markets to digest. The central bank noted that the recovery, which is ‘well underway’, is also ‘stronger than had been expected’. But it is clear that the RBA is happy to be patient, repeating its view that it will be ‘2024 at the earliest’ before the cash rate might need to be raised in response. The RBA also did not seem worried by the pick-up in the housing market.”
“The AUD movements are still driven by ‘Risk On-Risk Off’ (RORO) dynamics rather than local factors. We are conscious of rising US Treasury yield volatility over the near-term, as higher US yields may dent risk appetite and spur bouts of USD strength.”
“We still believe the global growth recovery remains supportive for the AUD this year. The currency’s correlation to broad commodity indices has picked up to at least a five-year high and rising terms of trade saw the current account surplus balloon out to 2.6% of GDP in 2020. This strong tailwind should persist in the coming months, particularly as Australia’s export commodity prices have risen a further 11.8% in the first quarter this year.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.