© Reuters.
HSBC has maintained a bearish stance on the forex pair, citing its three-month underperformance. This comes because the Reserve Financial institution of Australia (RBA) governor Michele Bullock continues to maintain charges regular regardless of potential future financial tightening. The Australian greenback has depreciated in opposition to a strong US greenback amidst a detrimental threat sentiment, making AUD/USD the weakest performer amongst G10 currencies this quarter.
HSBC’s pessimistic forecast is anchored on 4 key elements. Firstly, the diverging rates of interest between Australia and the US have performed a big function within the forex pair’s efficiency. Whereas Australia’s central financial institution has stored rates of interest regular, the US Federal Reserve has been hinting at potential charge hikes, making the US greenback extra engaging to buyers.
Secondly, China’s stagnant actual property and commodities market have influenced the Australian greenback’s efficiency. As a serious buying and selling companion of Australia, any slowdown in China’s economic system might have a big impression on Australia’s forex.
Thirdly, the burgeoning yield and financial benefit of the US have contributed to the AUD/USD’s underperformance. The US economic system has been displaying indicators of robust restoration from the impacts of Covid-19, resulting in elevated investor confidence within the US greenback.
Lastly, Australian superfunds adjusting their hedging methods in anticipation of additional AUD depreciation have additionally affected the forex pair’s efficiency. These funds are making ready for potential losses from additional depreciation of the Australian greenback in opposition to the US greenback.
Based mostly on these dynamics, HSBC anticipates sustained bearish developments for AUD/USD. It stays to be seen how these elements will proceed to affect the forex pair’s efficiency within the coming months.
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