Westpac's 1 - 3 month view on the Australian dollar, in very brief. This is a great summary of where we are at where we are going:
- Conditions remain very unsettled, and AUD/USD looks set to remain choppy and challenging.
- Further “volatility shocks” can’t be ruled out, which would see a retest of the 0.63-0.64 zone.
- At the same time, a good-sized rebound is on the cards when conditions settle.
- The Fed needs to start cutting in September, while RBA messaging was surprisingly hawkish. Its growth outlook was revised up, in part due to state and federal household support measures, and core CPI was revised slightly higher. The RBA is not currently contemplating cuts, making for meaningful AU-US yield spread improvement.
