AUD Rallies on Hawkish RBA Comments, UOB Still Sees Downside

The Australian Dollar (AUD) has been gaining against the US Dollar (USD) for two consecutive days, reaching levels around 0.7120 during Friday's Asian session.

This uptrend is attributed to hawkish comments from the Reserve Bank of Australia (RBA), with Governor Michele Bullock stating that inflation risks have materialized and another interest rate hike may be necessary.

UBS analysts now project two additional rate hikes, estimating a terminal cash rate of 4.85%, which would further strengthen the AUD.

However, UOB Group strategists maintain a bearish medium-term outlook for AUD/USD, predicting a drop toward 0.7050 if the currency fails to break above 0.7140.