Synopsis:

ANZ notes that historically, AUD/USD tends to weaken ahead of the first RBA rate cut, but post-meeting reactions depend on broader market conditions. Given the shallow expected easing cycle (50bp in 2025), significant downside from RBA alone is unlikely.

Key Points:

1. Past Easing Cycles & AUD/USD Reaction:

   • Large post-meeting declines in 2008 and 2001 occurred during major market crises (GFC, dot-com crash).
   • 2011 AUD/USD weakness was linked to Greek debt concerns, not RBA policy alone.

2. RBA’s Expected Path & AUD/USD Outlook:

   • ANZ forecasts only 50bp in cuts for 2025—a shallow easing cycle.
   • No major AUD/USD downside expected purely due to RBA policy.
   • If RBA delivers a neutral tone, a modest AUD rebound is possible.

3. Market Positioning & Spot Flows:

   • Net buying in AUD/USD has retreated, contributing to recent AUD weakness.
   • Short AUD/NZD trades may be premature, given RBNZ’s more aggressive easing outlook.

Conclusion:

ANZ is neutral on AUD/USD this week but sees upside risks around the RBA’s February meeting if the central bank maintains a neutral stance rather than leaning dovish.