Despite a few hiccups, AUD/USD has recovered some ground after touching sub-0.70 levels at the end of January. However, economists at ING expect the aussie to remain under pressure over the first half of the year.

RBA rate expectations are way overdone

“The improvement in China’s growth sentiment thanks to accommodative government and central bank policies are also helping the highly exposed AUD, but Beijing’s zero-Covid policy continues to cloud the outlook in the region.”

“The Reserve Bank of Australia has proved to be a secondary factor for AUD, but we think that rate expectations are way overdone, and expect only one hike in 4Q.”

“Downside risks should prevail for AUD/USD in the first half of the year, also due to USD strength.”