Australian Dollar: Gradual gains against US Dollar remain likely – MUFG
MUFG’s Michael Wan reports the Reserve Bank of Australia kept its policy rate at 4.35% in a unanimous decision. AUD/USD initially dipped on the statement but later rebounded as Governor Bullock reiterated hawkish inflation concerns.
The Reserve Bank of Australia maintained its policy rate at 4.35% in a unanimous vote, with the AUD/USD initially falling following the announcement. However, the currency later recovered as Governor Bullock emphasized hawkish inflation concerns. MUFG anticipates the AUD/USD to gradually surpass 0.70, primarily due to risk sentiment, potential Federal Reserve rate cuts, and a weaker US dollar.
The RBA remained cautious about external risks, including the Middle East conflict's potential impact and a softer property market. The organization also revised its consumption forecast downwards for the year end from 1.9% to 1.6%. In summary, MUFG's global team believes the AUD/USD will climb above 0.70, driven more by risk sentiment, Fed rate cuts, and a weakening US dollar, rather than further rate hikes by the RBA.
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