Kit Juckes, Chief Currency Strategist at Societe Generaleanalyzes the prospects for the Australian dollar.
Inverted curve in Australia
What remains frustrating is knowing that the Australian Government has much more fiscal room than others, and the correct strategy would be a modest rate cut and looser fiscal policy. This would raise the AUD significantly, but unfortunately it is unlikely.
Still, with stronger growth than the US next year (and stronger inflation), the RBA is likely to cut rates much more slowly than the Fed, and more slowly than it currently is. discounted on the forward curve. This should allow 5-year AUD yields to return above $5 on a sustained basis and drag AUD/USD back to the 0.69-0.75 band where it was trading the last time this happened.
The problem for bond investors, however, is that this may mean the curve remains inverted for most of 2023.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
