Since its low in October, AUD/USD has been recovering strongly. Economists at Société Générale believe that China reopening is set to boost AUD/USD beyond 0.70.

RBA meeting in February should see only a 25 bps hike

“The Chinese reopening remains the dominant macro theme in FX, while AUD/USD performance is strongly linked to Chinese equities. China grew faster than expected in 4Q22, as GDP printed at 0.0% QoQ (consensus expected -1.1%), and December activity data also surprised positively.”

“The next RBA meeting in February should see only a 25 bps hike, and the street only expects one other hike of that size to reach the terminal rate.”

“As the RBA turned dovish before most central banks, Australian growth should be one of the least impaired in G10 by the global tightening cycle, likely securing further AUD/USD gains towards 0.75.”