AUD/USD is too low relative to the likely RBA rate path – SocGen

FXStreet Insights Team FXStreet

Economists at Société Générale analyze AUD/USD outlook after the release of Q3 Wage Price Index in Australia.

The RBA may need to remain hawkish

Today’s slightly higher-than-expected Q3 wage growth data in Australia (4% YoY), largely reflects an increase in the minimum wage. However, it leaves the RBA in a slightly less comfortable position than some other central banks as we reach peak rates.

As rate differentials move in the AUD’s favour, the currency still looks undervalued.

The 2-year rate differential is higher than it was pre-COVID when AUD/USD was at 0.70.

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FXStreet Insights Team

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