We could see a bullish ‘pocket’ for the pair in September when Australian CPI readings could clearly show the impact of large electricity tariff increases due in July and force an RBA hike while the Fed holds on an improved inflation outlook.

The AUD swap curve prices in 14 bps to a peak, and the strict data-dependent approach by the RBA could leave more room for tightening speculation. China’s underwhelming growth story may still cap gains, but there is room for improvement thanks to Beijing’s added stimulus. 

We target 0.72 in the first quarter of 2024.