Australian Dollar Faces Headwinds Despite Expected Rate Hike

Rabobank's Senior FX Strategist Jane Foley notes that the Australian Dollar (AUD) is currently under pressure, making it the weakest G10 currency on a one-day view. Despite market doubts, Rabobank still expects one more Reserve Bank of Australia (RBA) rate hike this year.

The AUD/USD pair has been impacted by various headwinds, including weaker Chinese demand for Australian commodities and a softer domestic economic climate. Market commentary suggests that these factors could undermine the AUD going forward.

However, Rabobank still sees scope for a shallow uptrend in AUD/USD into next year, driven by the November RBA rate hike risk and the expectation that the Federal Reserve (Fed) will avoid tightening policy this year.