Westpac updated AUD/USD forecast:
- The economic ripples from Russia’s invasion of Ukraine continue to underpin energy prices, strengthening the outlook for Australia’s already large trade surpluses.
- But the Aussie remains at risk against a US dollar-backed by the Fed’s determination to frontload rate hikes and shrink its balance sheet, a notably more aggressive tightening stance than the RBA (at least for now).
- Equity markets have helped AUD/USD recently but are hardly on a firm footing, so pullbacks to around 0.70 or below during June would not surprise. However, a recovery to 0.74 or higher in Q3 remains likely.
- Australian growth should be swift in Q2 and Q3, supporting pricing for RBA tightening, while China’s policy focus will once again to infrastructure-led growth.
AUD weekly candles:
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