AUD/USD: Recovery to stall around the 0.71/0.72 zone – ING
|The Reserve Bank of Australia (RBA) ended QE but sounded patient on rate increases. The muted impact on AUD/USD is another indication that rate differentials are a secondary driver for the pair, according to economists at ING who expect the aussie to be capped at the 0.71/72 area.
A patient RBA remains a secondary driver for AUD
“While policymakers decided to end asset purchases, such a decision explicitly ‘does not imply a near-term increase in interest rates’.”
“We think that today’s post-RBA price action clearly indicates that rate differentials have remained a secondary driver for AUD/USD, unable to drive a significant divergence from the general USD/risk environment at the moment.”
“Periods of USD long trimming should still see AUD emerge as an outperformer due to its still extensive net-short positioning, but we think the very USD-supportive Fed stance on tightening will prevent a significant rebalancing in USD positioning for most of 2022.
“A recovery in risk sentiment can help AUD regain some more ground, but we think that any recovery in AUD/USD should stall around the 0.71/0.72 area.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.