Synopsis:

Credit Agricole expects two more 25bp RBA rate cuts in H2 2025, contingent on post-election fiscal clarity and inflation within target. Near-term AUD/USD remains sensitive to risk sentiment and trade policy, with Trump tariffs likely dragging AUD/USD to 0.62 by Q1-end.

Key Points:

1️⃣ RBA Rate Cuts Expected in H2 2025

• Two 25bp cuts are anticipated in H2 2025, contingent on:
  • Government spending clarity post-Federal election
  • Trimmed mean inflation stabilizing within 2-3% target

2️⃣ AUD/USD to Face Near-Term Pressure

• Risk sentiment and trade policy will be key drivers.
• Trump tariffs expected to weigh on AUD, limiting upside potential.

3️⃣ AUD/USD Target: 0.62 by Q1-End

• The bank maintains its end-Q1 target at 0.62, citing downside risks from tariffs and monetary policy divergence.

Conclusion:

Credit Agricole remains bearish on AUD/USD in the near term, expecting tariff-related headwinds to push the pair toward 0.62 by the end of Q1. Further RBA easing in H2 2025 will depend on post-election fiscal clarity and inflation dynamics.