"We noted in a previous update that although the post-Trumpian world of a stronger USD, bond yields and inflation expectations were taking AUDUSD to our forecast levels, the local picture looked mixed. In Australia, the balance of domestic risks since then has tilted decidedly to the downside.

Given prospects of further deterioration in the data, relatively sanguine pricing of RBA expectations, and a constrained fiscal policy, we downgrade our AUD forecasts vs. both the USD and NZD accordingly.

We revise our AUDUSD forecast lower to 0.72 in 3m and 0.70 in 12m.

We also revise our AUDNZD forecast lower to 1.011 in both 3m and 12m, keeping our NZDUSD forecasts unchanged".

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