The Australian Dollar (AUD) is expected to appreciate against the US Dollar (USD) and New Zealand Dollar (NZD) amid persistent underlying inflation, say UBS currency strategists.
AUD to turn bullish against USD and NZD
“Following stronger-than-expected inflation data for May, we believe a robust jobs report and higher quarterly CPI for the second quarter will likely lead to an interest rate hike by the Reserve Bank of Australia (RBA) in August. This supports our recommendation to sell AUD/USD downside price risks.”
“We also see an opportunity to go long AUD versus NZD as the Reserve Bank of New Zealand (RBNZ) made a surprise U-turn this week signaling deteriorating economic activity and slowing inflation.”
“We now expect the RBNZ to cut rates in August, rather than November, and think the NZD could underperform other G10 currencies.”
Source: Fx Street
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