Via Westpac, their latest Australian dollar outlook:

  • The Russia-driven supply squeeze should keep a floor under energy prices, strengthening Australia’s already large trade surpluses.
  • But Aussie rallies should be capped against a US dollar backed by the Fed’s determination to remain aggressive on rate hikes until there is compelling evidence of core inflation rolling over.
  • With global risk appetite still fragile and markets reluctant to price in a sharp recovery in Chinese growth just yet, the A$ in coming weeks seems likely to falter back to the 0.68-0.69 area, albeit avoiding the July lows sub-0.67. Into early Q4, scope for 0.71 as markets price a tapering in Fed tightening pace.


Chart update:

aud 12 August 2022