AUD/USD: Market pricing too much tightening in 2022 so aussie still looks vulnerable – MUFG

Matías Salord FXStreet

Despite the recent decline in AUD/USD, analysts at MUFG Bank, consider there is still scope for some further downside over the short-term. The see the Reserve Bank of Australia (RBA) is set to remain dovish.

Key Quotes:

“While we believe the RBA will have to hike sooner than the RBA’s current guidance of 2024, we doubt there is a compelling need to shift the guidance at this stage.”

“The market remains priced for around three rate hikes in 2022 and we do not expect the RBA outcome next week to be consistent with that. As well as mixed labour market conditions and limited evidence of wage growth picking up, Australia’s terms of trade has taken a negative hit with iron ore and coal prices both taking a tumble. With the RBA set to persist with QE until the February review and while the RBA could end QE at that stage, the contrast with the Fed over the coming months will keep downward pressure on AUD/USD.”

“AUD/USD is now down 8.25% year-to-date and at these levels is beginning to look stretched. However, with such a stark monetary stance, there is scope for some further downside over the short-term.”

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

EUR/USD climbs to daily highs near 1.1820

EUR/USD now picks up pace and advances to the area of daily peaks north of the 1.1800 barrier at the end of the week. The pair’s decent move higher comes against the backdrop of a generalised lack of direction in the FX galaxy and the mild offered stance in the US Dollar.

GBP/USD trims losses, retests 1.3460

After briefly challenging its key 200-day SMA near 1.3440, GBP/USD now manages to regain some balance and revisit the 1.3460 zone on Friday. Cable’s pullback comes as the selling pressure on the Greenback gathers traction, reigniting some recovery in the risk-linked space.

Gold flirts with four-week highs past $5,200

Gold extends its rebound, climbing for a third consecutive session and pushing back above the $5,200 mark per troy ounce on Friday. The move higher continues to draw support from lingering geopolitical tensions and the ongoing uncertainty surrounding US trade policy, both of which are keeping safe-haven demand firmly in play.

Bitcoin, Ethereum and Ripple consolidate with short-term cautious bullish bias

Bitcoin, Ethereum and Ripple are consolidating near key technical areas on Friday, showing mild signs of stabilization after recent volatility. BTC holds above $67,000 despite mild losses so far this week, while ETH hovers around $2,000 after a rejection near its upper consolidation boundary.

Changing the game: International implications of recent tariff developments

The Supreme Court ruling on International Emergency Economic Powers Act (IEEPA) tariffs provides limited relief for the rest of the world, with weighted average tariff rates modestly lower.

Starknet unveils strkBTC, shielded Bitcoin transactions on Ethereum Layer 2

Starknet, the Ethereum Layer 2 network developed by StarkWare, today announced strkBTC, a wrapped Bitcoin asset that introduces optional shielding while preserving full DeFi composability.