Australian Dollar: Shallow uptrend risk into next year – Rabobank

Rabobank's Senior FX Strategist Jane Foley warns of a shallow uptrend for the Australian Dollar (AUD) in the upcoming year. The AUD is currently the weakest performing G10 currency on a one-day view and the third weakest on a five-day view. Despite expectations of a further Reserve Bank of Australia (RBA) rate hike this year, market sentiment remains uncertain.

Factors such as weakened Chinese demand for Australian commodities and a softer domestic economic climate could potentially weaken the AUD in the future. However, Rabobank still believes there is potential for a modest AUD/USD uptrend into the next year, driven by the risk of a November RBA rate hike and the expectation that the U.S. Federal Reserve will refrain from tightening policy this year.