AUD/USD to sink towards the 0.71 level into year-end – Rabobank

AUD/USD is finding it difficult to pull away from the 0.72 area. A dovish Reserve Bank of Australia is set to weigh on the aussie. Subsequently, economists at Rabobank expect the pair to drop to the 0.71 level.

Dovish inflation outlook is likely to restrain the AUD

“The RBA retains a dovish tone, but is pushing ahead with its previous decision to taper its QE programme from September mostly on the expectation that the economy will bounce sharply once restrictions are lifted.” 

“The RBA has become surprisingly prescriptive in its view that wages will need to be growing by at least 3% to push CPI inflation sustainably into the middle of the 2% to 3% target band. This will then trigger a rise in the Cash rate. It is the Bank’s view that this will not happen before 2024. This dovish outlook is likely to restrain the AUD.”

“Despite the support from higher energy prices, we see risk of a dip to AUD/USD 0.71 on a one-to-three month view.”