AUD rates continue to be in focus after the Reserve Bank of Australia once again did not defend its yield target. Economists at Citibank expect the AUD/USD to turn back lower as the 0.7550 level proves to be a tough resistance.
Pullback in commodity prices dampens the AUD
“The RBA decided not to defend its 3y yield target 0.1% which sent the April 2024 bond soaring. This has increased conviction that RBA may shift more hawkish in their forward guidance. However, as reflation bets move towards stagflation ones, the aussie struggles, particularly with the pullback in commodity prices that has kept it supported all month.”
“Add to that the usual USD bid into month end, and risk/reward in AUD/USD appears more skewed to the downside, with 0.7550 providing firm resistance.”