AUD/USD: Risk aversion and yield differentials to create near-term downside pressures – HSBC

AUD/USD has dived below the 0.69 mark. Economists at HSBC expect the aussie to face more headwinds ahead.

RBA should pivot soon to deliver a “soft-landing”

“Risk aversion amid slowing global demand and yield differentials would likely create near-term downside pressures for the AUD.”

“For the Reserve Bank of Australia (RBA’s) next meeting on 6 September, the market is priced for 39 bps of tightening (Bloomberg, 18 August 2022), while we think that the central bank should pivot soon to deliver a ‘soft-landing’. This will likely lead to AUD weakness.” 

“Some recent softening activity data in China, contributing to a global downtrend, would probably weigh on the AUD, given Australia’s high exposure to trade.”