Further AUD downside is limited – CIBC

FXStreet Insights Team FXStreet

Economists at CIBC Capital Markets do not expect the Australian Dollar to weaken and retain their AUD/USD forecast of 0.6600 in the first quarter of the year.

AUD should be relatively stable

We do not expect RBA cuts until Q3 or later (after the Fed).

Stable RBA policy amid Fed cuts, and strength in the Australian services sector means that AUD should be relatively stable, despite ongoing China weakness.

We think AUD/USD will continue to react to Fed expectations – with March FOMC pricing now at 50% chance for a cut, we think further AUD downside is limited, and maintain our AUD/USD forecast of 0.6600 in Q1.

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD picks up bids above 0.7100 after RBA-speak

AUD/USD picks up bids above 0.7100 in the Asian session on Tuesday, following hawkish comments from RBA Assistant Governor Sarah Hunter and Governor Michele Bullock. However, escalating tensions in the Middle East and the Fed's hawkish outlook remain supportive of the bullish US Dollar undertone, which could limit the pair. The crucial Trump-Xi summit is later this week and remains in focus.

USD/JPY holds small gains near 157.50 as JPY intervention risks loom

USD/JPY posts modest gains while trading near 157.50 in the Asian session on Tuesday as intervention fears help limit losses for the Japanese Yen. However, the BoJ's dovish rate hike to a 31-year high keeps JPY bulls on the back foot. Meanwhile, the US Dollar retains a bullish undertone amid the Fed's hawkish outlook and escalating Middle East tensions, providing tailwinds for the pair.

Gold lacks a clear directional impetus, with eyes on geopolitics

Gold struggles around $4,350 early Tuesday as sellers keep lurking at higher levels. US Dollar consolidates previous gains amid Oil price rebound and Treasury yields retreat. Gold’s daily technical setup paints a mixed picture, with a neutral daily RSI.

Pepe signals trend reversal amid a short squeeze

Pepe (PEPE) price is up nearly 30% in the last 24 hours, outperforming most top cryptocurrencies and hinting at further upside potential. Derivatives data suggest a short squeeze of more than $2 million during the same period, forcing traders to buy back positions in the meme coin. The technical outlook for PEPE indicates an upside bias as bullish momentum strengthens.

WTI looks to reclaim $93.00 after defending 38.2% Fibo. support

West Texas Intermediate (WTI) attracts some buyers during the Asian session, snapping a four-day losing streak to sub-$91.00 levels, or a nearly two-week low touched the previous day. The commodity currently trades just below the $93.00 mark, up around 1.40% for the day, as the focus remains on the Middle East crisis.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.