- AUD/USD will struggle to move back above the 0.66 level in the near term – MUFG
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AUD/USD will struggle to move back above the 0.66 level in the near term – MUFG
The Australian Dollar has underperformed following the RBA meeting. Economists at MUFG Bank analyze Aussie’s outlook.
RBA signals less confidence in need for further hikes
With the RBA now in data dependent mode, it will require more upside inflation surprises to prompt the RBA to hike further.
While we doubt that the upcoming data flow will trigger further RBA hikes, the RBA’s concern over persistent inflation risks could deter the RBA from lowering rates prematurely next year. We still see room for the Australian rate market to further pare back rate hike expectations which will act as weight on the Australian Dollar going forward.
The external backdrop also remains challenging for the Australian Dollar with global growth weak and likely to weaken further next year in response to tighter monetary policy.
It will be difficult for the AUD/USD pair to raise back above the 200-DMA at just above the 0.6600 level in the near term.
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