Analysts at Wells Fargo forecast the AUD/USD pair at 0.7100 by the end of the second quarter, at 0.6900 by year-end and at 0.6800 by the first quarter of next year. They warn risks are tilted to the upside.
“After a steady rebound in growth in Q4-2021, labor market and activity trends during 2022 suggest solid economic fundamentals for Australia's economy amid building inflationary pressures.”
“The RBA raised its Cash Rate by 25 bps to 0.35% at its May monetary policy meeting, citing a resilient economy with inflation that has risen faster and higher than previously expected, as well as progress toward full employment and wage growth. The move surprised many market participants, given the consensus forecast for a hike of only 15 bps (…) The minutes indicated the RBA will review the size of its rate hikes again based on new information each month.”
“Our base case is for the Australian dollar to weaken moderately in the quarters ahead. However, we believe the risks are tilted to the upside, and it is possible that there will be a smaller decline in the currency than our base case forecast suggests.”
“More persistently elevated underlying inflation could prompt the Reserve Bank of Australia to raise rates faster than currently expected, which would be supportive of the currency.”
“In this more favorable scenario, the AUD/USD exchange rate might soften only moderately, perhaps not weakening much below the $0.6900 level.”
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.