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May 08 - 12:55 AM

SocGen: Fed Seen as Primary Driver for AUD/USD After May RBA; AUD/USD Stuck in a Range

By eFXdata  —  May 07 - 04:30 PM


Société Générale assesses the impact of the Reserve Bank of Australia's (RBA) latest policy decisions on the AUD/USD exchange rate, emphasizing the Federal Reserve's more significant role in influencing the currency pair's movements.

Key Points:

  • RBA's Limited Influence: The recent RBA meeting highlights its limited impact on the AUD/USD, with the currency's future largely tethered to actions taken by the U.S. Federal Reserve.
  • AUD/USD Trading Range: The AUD/USD has been confined within a USD 0.63-0.69 range over the past year, closely mirroring a stable 5-year yield differential between the U.S. and Australia.
  • Yield Differential Significance: Significant shifts in AUD/USD are contingent on the yield differentials; a move towards AUD/USD 0.7 would require Australian yields to exceed those in the U.S., whereas a potential dip below 0.60 would need U.S. yields to be over 1% higher than Australian yields.
  • External Economic Factors: A sluggish recovery in China and subdued Australian export prices provide little domestic support for the Australian dollar, placing greater emphasis on U.S. economic policies and the Fed's decisions.


While SocGen maintains a positive long-term outlook on the Australian dollar, they underscore that its near-term fate is more closely tied to U.S. monetary policy rather than domestic factors. With the AUD/USD currently stuck in a narrow range, investors and traders are advised to keep a close eye on Fed actions and broader U.S. economic indicators.

Société Générale Research/Market Commentary


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