AUD/USD to grind lower towards 0.70 by year-end before recovering in 2022 – Rabobank

AUD/USD is clinging to 0.74, however, the pair is set to move downward in the coming months, according to economists at Rabobank. What’s more, the Reserve Bank of Australia (RBA) is said to be maintaining a dovish stance given the virus is fast becoming reality.

Population will have to live with the virus

“Current vaccination rates suggest that some degree of restrictions will remain until November. This leaves little room for doubt about the commitment by the RBA to its dovish position.”

“The experience of the lifting of last year’s lockdown suggests that there is scope for the economy to bounce back sharply next year once restrictions are lifted. That said, the RBA has given itself flexibility to increase policy stimulus if necessary.”

“Although the AUD has recovered from its lows, we see risk of further weakness in the currency pair towards 0.70 on a one-to-three-month view before a recovery in the AUD sets in next year.”