Having reached a late December high around 0.6871, AUD/USD dipped to 0.6500 this month. Economists at Rabobank analyze Aussie’s outlook.
EUR/AUD to trend lower to 1.5600 on a 12-month view
At first sight, the Australian January Labour data encouraged the view that the economy is cooling, this sparked speculation that the RBA may bring forward the first rate cut of the cycle. That said, it is very likely that policymakers will need a lot more economic data before making a policy decision.
To date, the RBA has remained one of the more hawkish G10 central banks and Rabobank expects that rates are likely to remain on hold until Q4.
Assuming the Fed cuts rates first, this should allow AUD/USD to push higher later in the year.
Reflecting the relative resilience of the Australian economy compared to Germany, we also expect EUR/AUD to trend lower to 1.5600 on a 12-month view.
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