USD/AUD Outlook:
Bearish, as the rate is below its recent average and near recent lows, pressured by weak US consumer data and Australian monetary policy changes.
Key drivers:
- Rate gap: The Federal Reserve's decision to hold interest rates steady contrasts with the Reserve Bank of Australia's recent hike, widening the yield difference.
- Risk/commodities: Ongoing weakness in US consumer spending raises concerns for the USD, impacted significantly by fluctuations in global confidence towards economic stability.
- One macro factor: The sharp decline in Australian consumer confidence suggests that domestic economic challenges may hinder any significant AUD recovery.
Range:
The USD/AUD is likely to drift within its recent range as both currencies face opposing pressures.
What could change it:
- Upside risk: A better-than-expected US jobs report could bolster the USD against the AUD.
- Downside risk: Further declines in Australian consumer sentiment may intensify downward pressure on the AUD.
