**Rabobank’s AUD/USD Outlook: Short-Term Stability, Gradual Upside over 12 Months**
_Source: Adam Button for ForexLive via TradingView; additional information from Reuters, Bloomberg, and ANZ Research._
### Executive Summary
Rabobank, a leading Dutch bank, has shared its latest analysis of the Australian dollar’s performance against the US dollar (AUD/USD). According to the research, Rabobank anticipates the AUD/USD pair to hover around the 0.65 level in the near term. However, the bank expects a modest strengthening of the Australian dollar, projecting a gradual rise to 0.68 over the coming 12 months. This forecast reflects several underlying economic factors that remain in play, ranging from domestic monetary policy to global risk sentiment.
This article delves into Rabobank’s outlook, the key factors influencing the AUD/USD pair, recent economic developments in Australia and the United States, and insights from other leading financial institutions for a comprehensive view of the currency pair’s trajectory.
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### Current State of the AUD/USD Pair
The AUD/USD exchange rate has traded for the most part in a narrow range throughout the first half of 2024, reflecting a complex interplay of domestic and international factors. As of June 2024, the pair sits near 0.65, marking a period of relative stability after earlier volatility driven by interest rate differentials, economic data surprises, and shifting global risk appetite.
#### Key Influences on Recent Price Action
– **Diverging central bank policy expectations**
– **Commodity market fluctuations, particularly iron ore and energy**
– **China’s economic outlook, as Australia’s key trading partner**
– **Global risk sentiment and appetite for risk assets**
– **US dollar strength**
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### Rabobank’s Forecast for AUD/USD
Rabobank’s research, as reported by Adam Button for ForexLive, presents a cautiously constructive outlook on the AUD/USD:
– **Short-Term View:** Rabobank expects AUD/USD to remain close to the 0.65 level in the near term. This view is anchored in the anticipation that the Reserve Bank of Australia (RBA) will maintain a cautious stance on monetary policy, while the US Federal Reserve is seen as having limited room to cut interest rates quickly.
– **12-Month Forecast:** Over a 12-month horizon, Rabobank projects a gradual advance of the Australian dollar, with the pair reaching 0.68. This forecast assumes some improvement in global risk sentiment, stabilization or modest recovery in China’s economic activity, and a slight narrowing of interest rate differentials between the US and Australia.
#### Rationale for the Outlook
Rabobank’s analysis is driven by the following considerations:
– **Limited RBA Rate Hikes Ahead:** In contrast to some earlier market assumptions, Rabobank does not see the Reserve Bank of Australia moving aggressively with rate hikes. Inflation in Australia, while sticky, is not accelerating at a pace that warrants drastic tightening, especially as wage growth appears to be moderating.
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