Upside risks for the Aussie in the coming months are predominant – Commerzbank

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Since mid-July, AUD/USD has weakened significantly. Economists at Commerzbank analyze the pair’s outlook.

The main focus of the RBA is inflation

The data currently paints a picture of a fairly resilient economy that is still surprisingly able to withstand interest rate increases. Ultimately, the still-strong economic indicators suggest that the risks to the RBA’s monetary policy are tilted towards a tighter stance.

The market is currently undecided whether there will be another rate hike this year. The best time for this would probably be at the November meeting, as the new quarterly inflation figures will be published shortly before. If these surprise to the upside, indicating that underlying inflationary pressures remain strong, there is a chance that the RBA will react and hike again.

However, it is likely to focus on ‘higher for longer’ for now – supported by the strong economy. In our view, this should support the Aussie in the coming months.