AUD/USD: Rally can extend this summer – ING

Higher
chances
of

Trump
winning
in
November
means
trouble
for
the
China-sensitive
Australian
Dollar
(AUD)
in
the
longer
run.
The
Reserve
Bank
of
Australia
(RBA)
is
perhaps
facing
the
worst
inflation
issue
in
G10,
ING’s
FX
strategist
Francesco
Pesole
notes.

AUD
still
has
room
to
run
this
summer

“Higher
chances
of
Trump
winning
in
November
spell
trouble
for
the
China-sensitive
AUD
in
the
longer
run.
But
the
tactical
picture
hinges
much
more
on
US
macro
and
domestic
central
banks.”

“The
RBA
is
perhaps
facing
the
worst
inflation
issue
in
G10,
with
consistently
hot
monthly
CPI
prints
taking
it
closer
to
another
hike.
31
July
will
be
the
decisive
day:
2Q
CPI
data
are
out,
and
if
they
surprise
on
the
upside,
we
think
the
RBA
will
hike
in
August.”

“Even
if
another
hike
can
be
averted,
the
prospect
of
cuts
is
increasingly
remote.
Given
our
view
that
markets
will
reward
currencies
with
hawkish
central
banks,
AUD
still
has
room
to
run
this
summer,
before
the
US
election
becomes
too
close
to
ignore.”