📝Hold Optimistic AUD Outlook Despite Fed Tightening: ING

The likelihood of another rate hike by the Reserve Bank of Australia would rise, especially in a potentially rocky summer for energy markets. The Bank might have a slightly higher bar to tighten again, but it has shown little hesitation to act if data heats up.

The positive impact on AUD/USD from another RBA hike would, however, be more than offset by potential Fed tightening, which tends to have a deeper impact on high-beta currencies than domestic stories.

Beyond a potentially turbulent summer, we remain optimistic on AUD's outlook. Carry and terms-of-trade improvements are pointing higher. If risk sentiment holds, AUD should emerge as an outperformer again later this year. - ING