AUD/USD: War risks and RBA tension – DBS
|DBS Group economist Philip Wee notes that the Australian Dollar is supported by hawkish domestic fundamentals but constrained by global risk aversion linked to the Iran War. Markets expect a back-to-back RBA hike to 4.10% on March 17, framed as an insurance move. AUD/USD support is seen around 0.69–0.70, conditional on a relatively dovish Fed and CNY strength.
AUD weighed by war and RBA stance
"AUD is caught between hawkish domestic fundamentals and a deteriorating global risk environment."
"Following Reserve Bank of Australia Deputy Governor Andrew Hauser’s recent signalling that the economy was running beyond its sustainable capacity, markets have priced in a back-to-back 25-bps hike to 4.10% at the March 17 policy meeting."
"RBA Governor Michele Bullock has acknowledged the Iran War as a double-edged sword that necessitates a “high alert, data-dependent” stance."
"Hence, AUD/USD will rely more on a net dovish-sounding Fed and continued CNY appreciation for support around 0.69-0.70."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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