Economists at Rabobank maintain the view that the Aussie is vulnerable to further falls in the coming months as the extent of the unfolding demand-side shock unveils itself.
“The AUD retains a strong link with risk appetite. While this has buoyed it in recent weeks, we expect support to fall away as Q2 economic data makes itself heard.”
“Even though the release of Australian Q1 CPI data produced a stronger than expected 2.2% y/y increase, Q2 data are still likely to shock. According to RBA Governor Lowe, Australia’s economy is likely to suffer its biggest contraction since the 1930s by diving around 10% over the first half of 2020.”
“As Q2 economic data begins to unfold, we see risk of AUD/USD turning lower towards AUD/USD 0.60 on a 3-month view.”