Synopsis:

ANZ expects AUD/USD to face near-term headwinds due to tariff risks and concerns over China but anticipates a recovery toward 0.67 by the end of 2025, supported by resilient domestic fundamentals and limited RBA easing.

Key Points:

• AUD/USD has dropped from 0.69 in September to below 0.64 in December.
• No RBA rate cut expected in Q1 2025, with easing likely starting in May.
• RBA expected to deliver two rate cuts in 2025, ending at a 3.85% terminal rate.
• Tariff-related risks and China concerns could trigger intraday moves toward 0.60.
• Australia’s economic resilience, driven by population growth and potential fiscal easing, supports a recovery in the AUD.

Conclusion:

ANZ sees downside risks for AUD/USD in H1 2025 due to potential trade policy shocks but expects stabilization and recovery toward 0.67 by year-end as macro fundamentals come into play.