Economists at Société Générale analyze AUD outlook.
RBA needs to become more hawkish if we are to see AUD/USD trade back above 0.70
We now expect a protracted range-bound period where buying AUD should be a frustrating exercise.
By the end of this year, we expect RBA rates to be 75 bps below the Fed rate, almost exactly where the market is currently. If we want to see AUD/USD trade above 0.70 the RBA will need to become more dovish.
Australia’s iron exports to China are on a declining trend since the start of the year. With contracting demand for metal production and thus for the currency, the Aussie is gradually losing its sparkle.
