We now expect a protracted range-bound period where buying AUD should be a frustrating exercise.

At the end of this year, we expect RBA rates to be 75 bps below Fed rates, almost exactly what is currently priced into the market. The RBA needs to become more hawkish if we are to see AUD/USD trade back above 0.70.

Australia’s iron exports to China are on a declining trend since the start of the year. With contracting demand for metal production and thus for the currency, the Aussie is gradually losing its sparkle.