Jane Foley, Senior FX Strategist at Rabobank, thinks that the AUD/USD pair could drop toward 0.7200 by the end of the year.

Key quotes

“Over the coming year or so, developments in the Australian labour market and in particular wage data will be instrumental in guiding expectations regarding RBA policy.”

“In this time-frame, it is likely that the market will be watching for any further changes potentially on the Bank’s QE policy
or on the guidance with respect to the Cash rate, which the RBA does not expect to adjust until 2024.”

“The impact of any changes on AUD/USD will depend on the expected path of policy from the Federal Reserve. Assuming the RBA is seen as a laggard on policy, it is reasonable to assume that AUD/USD could track lower. Consequently, we have adjusted down our AUD/USD forecasts. We now see scope for the currency pair to edge towards 0.72 by year-end.”