We think the domestic picture will improve for AUD, as the RBA may well have to hike again despite market’s flat rate expectations. 

The monetary policy story could potentially come through as a positive factor at a time (September, for example) when USD resilience hasn’t abated yet, meaning an RBA-driven bullish pocket for AUD could initially be mostly mirrored in relative strength against other pro-cyclical currencies rather than on AUD/USD. 

In line with our bearish USD call for later in the year, we expect AUD/USD to rebound back to the June and July 0.69 peaks before year-end, and then find more support above 0.70 in the first half of 2024.