Dovish guidance from the Reserve Bank of Australia (RBA) lingers and commodities are wobbling. A solid USD suggests scope for 0.7250, but that would be attractive on the multi-week/month AUD/USD outlook, in the view of economists at Westpac.

AUD/USD under pressure near-term

“The impact of the RBA’s dovish cash rate view lingers, even if markets are still content to price in a considerable tightening in H2 2022.”

“The aussie’s commodity price support remains under pressure as slumping Chinese steel production seems likely to persist, perhaps through to the Feb Beijing Winter Olympics. Equity wobbles add to the prospect of further AUD/USD decline in the coming days, perhaps to around 0.7250.”

“Still, we retain our 0.75 year-end target, with Australia on track for one of the highest vaccination rates in the world, likely to help build momentum into 2022. Current account surpluses also provide insulation.”