The recent economic data has been favorable for the Australian dollar, which has surged past the 0.6500 mark. While the currency remains sensitive to shifts in market sentiment, the delayed expectations of policy easing and the ability to maintain support in a stable risk environment strengthen the AUD’s position.
According to ING analyst Francesco Pesole, while the risks of another hike are not totally negligible, inflation figures were probably insufficient to warrant such a turnaround in policy. ‘We think the Reserve Bank of Australia can achieve its inflation target without having to raise rates again, but may well need to digest some further bumps in inflation, which suggest further steps to the dovish side in communication will be taken with more caution,’ Pesole said.
