Interest rate differentials look set to offer the AUD support through much of next year. That said, the AUD is sensitive to broad levels of risk appetite and to the outlook for Chinese growth. While Fed rate cuts would underpin risk appetite in 2024, a rally in the AUD/USD could be curtailed if growth in China continues to disappoint. 

On balance, we are optimistic that AUD/USD could be testing the 0.70 area on a 12-month view. This would be in line with the average level of the exchange rate over the past 5 years.