AUD to remain resilient to US rate hikes - CBA

Dhwani Mehta FXStreet

Analysts at Central Bank of Australia (CBA), in its latest note, highlighted that the AUD will stand resilient to further US rate hikes, while enlisting four reasons for the same.

Key Reasons:

Structural improvement in Australia's current-account deficit (to 0.6% of GDP vs 4-5% of GDP in 2001 period)

Asian and global GDP growth remains firm, and Asia is running a current-account surplus (in 2001 the region had a large current-account deficit, and was recovering from 1997-98 Asian financial crisis)

Australia's terms of trade is 62% higher than 2001

U.S. dollar is unlikely to see strength vs majors, unlike 2001 (absent delivery of US company tax cuts, USD is unlikely to appreciate much)

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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