– With interest rate markets pricing 18bp of cuts and analysts split between no change and a cut, the 25bp RBA rate cut that we expect next week is likely to narrow Australia-US interest rate differentials and place downward pressure on AUD/USD.
– That said, we do not expect aggressive depreciation in the AUD, with continued real-money demand for high-quality and relatively high-yielding AUD assets providing some support. These factors point to AUD/USD trading in a relatively tight range with a downward bias.
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Barclays Capital