**Rabobank Outlook for AUD/USD: Steady in the Short Term, Gradual Strength Over 12 Months**
*Based on reporting by Eamonn Sheridan for Forexlive via TradingView, with additional analysis*
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**Overview**
The Australian dollar (AUD) has long been viewed as a currency tied closely to global commodity cycles, risk sentiment, and shifts in key trading partner economies, most notably China. In a recent forecast, Rabobank analysts suggest the AUD/USD pair will hold near current levels in the short term, with potential appreciation over a one-year horizon. This analysis draws from Eamonn Sheridan’s article on TradingView and logical extensions from additional institutional reports and macroeconomic data published in 2024.
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**Rabobank’s Key Forecasts**
– The AUD/USD is expected to stay around the 0.65 level in the near term.
– Twelve-month outlook suggests a rise to approximately 0.68.
– Several domestic and global factors underpin these projections.
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**Short-Term Factors Keeping AUD/USD Near 0.65**
1. **Central Bank Policy Divergence**
– *RBA’s Stance*: The Reserve Bank of Australia (RBA) has maintained the cash rate at 4.35 percent in 2024, signaling a cautious approach due to sticky domestic inflation and concerns about household debt burdens.
– *Fed Comparisons*: The US Federal Reserve, as of June 2024, kept interest rates elevated, with markets debating the timing and pace of possible future cuts. US inflation data has surprised to the upside in key readings, reducing pressure to cut rates aggressively.
– **Impact**: The less dovish stance from both central banks reduces the likelihood of significant rate-driven divergence, limiting large moves in the currency pair.
2. **Australia’s Economic Backdrop**
– *Growth*: Australia’s GDP growth remains modest, clipping along at roughly 1.5 percent annualized in recent quarters.
– *Employment and Inflation*: Labor market data indicate a slight softening, but wage growth and elevated housing costs contribute to persistent inflation, hovering above RBA’s 2-3 percent target.
– **Impact**: Domestic economic softness has kept RBA from hiking further, capping AUD strength.
3. **Global Risk Appetite and Commodity Prices**
– *China Impact*: China’s less robust post-pandemic recovery, coupled with property sector troubles and weaker manufacturing data, has reduced demand for Australian exports like iron ore, coal, and LNG.
– *Commodities*: Prices of key Australian exports have remained volatile but lack the sustained upward momentum of past supercycles.
– *Risk Sentiment*: Episodes of global risk aversion, including spikes in geopolitical tensions in the Asia-Pacific region or concerns about US debt sustainability, have generally favored safe-haven flows into the US dollar.
– **Impact**: Reduced demand for risk and falling commodity prices restrain the AUD.
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**Factors Supporting AUD/USD
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