RBA/Fed convergence could boost AUD/USD in 2024 – SocGen

AUD/USD has surged above 0.6500. Economists at Société Générale analyze the pair’s outlook.

A new dawn or further frustration for AUD bulls?

SG economics is aligned with consensus for a +25 bps hike in CRT to 4.35%. All of the big four Australian banks forecast an RBA hike.

It is too soon to declare a turning point in the US rate cycle but speculation that the next move will be cut by the Fed in 2024, at a time when the RBA is resuming hikes, gives the AUD a decent chance to mount another attempt to move away from the lows between 0.62-0.63.

Re-correlation with S&P, divergence from China, large short speculative base boost optimism for AUD/USD rebound to 0.67-0.68.