The Reserve Bank of Australia is reluctant to concede that the tightening cycle is over, suggesting that the policy rate will stay elevated for some time to come. Stimulus efforts in China may – eventually – lead to some sustained economic improvement in a key export market for Australia. 

The AUD looks relatively ‘cheap’ among its major currency peers in broad terms and trades below our own short-term, fair value estimate currently. 

Market sentiment remains bearish but aggressive short AUD positioning has eased somewhat from the peaks seen late last year. 

AUD/USD – Q1-24 0.6600 Q2-24 0.6600 Q3-24 0.6800 Q4-24 0.6800