AUD/USD to continue weaking in the coming months – Danske Bank
|The Reserve Bank of Australia (RBA) Board has delivered a dovish surprise at its October meeting. AUD/USD moved sharply lower following the decision and economists at Danske Bank expect the pair to weaken over the coming months.
Recent tightening in financial conditions to constrain economic activity with a lag
“The RBA surprises dovish by hiking rates by only 25 bps. Consensus was looking for another 50 bps hike, while market was split between 25 and 50.”
“While Australian inflation remains clearly above target and labour market conditions are still historically tight, RBA emphasized the weakening global growth outlook as a key reason to slow the pace of hikes back to 25 bps.”
“Market's longer-term inflation expectations have moderated, and RBA sees that the recent tightening in financial conditions will continue to constrain economic activity with a lag.”
“We see risks tilted towards further AUD weakening on a 12M horizon.”
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.