The Reserve Bank of Australia (RBA) maintained its monetary policy unchanged in February. While inflation slowed down more than expected in Q4, RBA’s communication remained hawkish due to still tight labour markets and elevated domestic price pressures in the services sector. Market prices in the first rate cut only by Aug/Sep, but we see risks tilted towards an earlier start to the cutting cycle. 

The latest move lower in the cross has been well aligned with our expectations, and we maintain a bearish forecast profile also going forward. Solid macro-outlook in the US, relative central bank pricing and sluggish growth in the key Australian export market China all weigh on AUD/USD going forward.

Forecast: 0.6500 (1M), 0.6400 (3M), 0.6300 (6M), 0.6200 (12M)