Aussie dollar to snap losing streak on RBA stance, China support

The Aussie volition ascent arsenic precocious arsenic 68 cents by December, according to Westpac Banking Corp. and Bank of America Corp., which would connote a summation of 8.4% from Friday’s close. National Australia Bank Ltd. and Westpac spot the currency rising to 65 cents by the extremity of June, aft immoderate archetypal volatility.

The Reserve Bank of Australia’s reluctance to participate an easing rhythm has helped enactment the Aussie, and investors are awaiting ostentation information owed this week to gauge if the cautious attack has been vindicated. The currency’s entreaty has besides gotten a boost arsenic China — Australia’s largest trading spouse — pledges to antagonistic US levies by stimulating home spending.

All this is happening arsenic marketplace watchers are informing that President Donald Trump’s assertive commercialized argumentation volition wounded US economical maturation and weaken the dollar.

“We spot a gradual betterment successful the Australian dollar from the 2nd 4th onward, propelled archetypal by dollar depreciation followed by the lagged interaction of China stimulus successful the 2nd fractional of 2025,” said Oliver Levingston, a strategist astatine Bank of America successful Sydney. A higher RBA terminal argumentation complaint - driven by sticky ostentation - volition besides enactment a medium-term trough successful Aussie, helium added.

Economists forecast that the cardinal slope volition basal pat adjacent period aft lowering borrowing costs for the archetypal clip successful 4 years successful February. Policymakers person expressed caution astir further easing arsenic they privation to spot further grounds that ostentation is nether control.

“We deliberation that terminal complaint pricing is excessively low,” said Andrew Ticehurst, a elder strategist astatine Nomura Holdings Inc. successful Sydney, who sees the Aussie strengthening to 64 cents successful the 2nd 4th connected a weaker greenback. Australia’s currency is “trading a small beneath ‘fair value’ based connected historical relationships with commodity prices and complaint spreads.”

The Aussie has risen 1.3% this twelvemonth aft declining astir 10% successful 2024. Hedge funds person slashed their bearish wagers connected the currency since January aft they were the astir abbreviated successful a decade, according to information from the Commodity Futures Trading Commission.