HSBC has maintained a bearish stance on the foreign money pair, citing its three-month underperformance. This comes because the Reserve Financial institution of Australia (RBA) governor Michele Bullock continues to maintain charges regular regardless of potential future financial tightening. The Australian greenback has depreciated towards a strong US greenback amidst a adverse danger sentiment, making AUD/USD the weakest performer amongst G10 currencies this quarter.

HSBC’s pessimistic forecast is anchored on 4 key components. Firstly, the diverging rates of interest between Australia and the US have performed a big position within the foreign money pair’s efficiency. Whereas Australia’s central financial institution has stored rates of interest regular, the US Federal Reserve has been hinting at potential charge hikes, making the US greenback extra enticing to traders.

Secondly, China’s stagnant actual property and commodities market have influenced the Australian greenback’s efficiency. As a significant buying and selling associate of Australia, any slowdown in China’s economic system might have a big influence on Australia’s foreign money.

Thirdly, the burgeoning yield and financial benefit of the US have contributed to the AUD/USD’s underperformance. The US economic system has been exhibiting indicators of robust restoration from the impacts of Covid-19, resulting in elevated investor confidence within the US greenback.

Lastly, Australian superfunds adjusting their hedging methods in anticipation of additional AUD depreciation have additionally affected the foreign money pair’s efficiency. These funds are getting ready for potential losses from additional depreciation of the Australian greenback towards the US greenback.

Primarily based on these dynamics, HSBC anticipates sustained bearish traits for AUD/USD. It stays to be seen how these components will proceed to affect the foreign money pair’s efficiency within the coming months.

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