Australian dollars to lose streaks in RBA stance, China’s support
(Bloomberg) – The Australian dollar could be directed towards its first annual profit since 2020, as central banks keep interest rates high and the economy will benefit from the expected stimulus of China.
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Australians will reach 68 cents by December, according to Westpac Banking Corp. and Bank of America Corp. National Australia Bank Ltd. and Westpac can see that their currency has risen to 65 cents by the end of June after their initial volatility.
The reluctance of the Reserve Bank to enter the easing cycle has helped Australians, with investors waiting for inflation data this week to measure whether a cautious approach is being proven. Currency appeals are also being supported by China (Australia’s largest trading partner) pledging to counter US taxation by stimulating domestic spending.
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All this is happening as market watchers warn that President Donald Trump’s aggressive trade policy will hurt US economic growth and weaken the dollar.
“The Australian dollar has gradually recovered since the second quarter, driving depreciation of the first dollar that had a delayed impact on China’s stimulus package in the second half of 2025,” said Oliver Levingston, strategist at Bank of America in Sydney. Higher RBA terminal policy rates – driven by sticky inflation – also support Australia’s medium-term trough, he added.
Economists predict that the central bank will withstand PAT next month after lowering borrowing costs for the first time in four years in February. Policymakers are expressing caution regarding further mitigation as they would like to see further evidence that inflation is under control.
“We think terminal rate pricing is too low,” said Andrew Ticehurst, senior strategist at Nomura Holdings, Sydney. Australian currency trades “fair value” to a little less than or equal to the historical relationship between commodity prices and rate spreads.”
Aussie rose 1.3% this year after a near 10% decline in 2024. Hedge funds have cut bear bets in their currency since January, the shortest in a decade.