At the end of last week, the AUD/USD pair sharply rushed down. Some experts believe that this is the perfect moment to buy Aussie, which is predicted to grow impressively for the year.
The Australian currency has been on a rollercoaster ride again. At the end of last week, the AUD/USD pair showed a steep peak, retreating from a 6-week high.
On Friday, the greenback index strengthened against a basket of 6 major currencies after the publication of an optimistic report on employment in the United States.
The data turned out to be better than forecasts and indicated an increase in jobs last month. This strengthened the arguments in favor of further tightening of the Fed's exchange rate.
This morning, the Aussie continues to decline against the US currency. At the time of preparation of the material, the pair was trading below the 0.7200 mark amid mixed sentiment.
On the one hand, the pressure on the Aussie is exerted by the approach of the release of CPI data in the US for May. They will be published on Friday.
If the indicator turns out to be higher than forecasts, this may force the Fed to act more aggressively, which will be favorable for the US currency.
On the other hand, the "Australian" is now supported by news from China. According to the Beijing authorities, starting today, the capital's restaurants will be able to serve visitors indoors.
The weakening of quarantine in China is an excellent impetus for the growth of commodity currencies, which include the Australian dollar.
Nevertheless, now traders are in no hurry to buy Aussie and are showing increased caution towards this currency on the eve of tomorrow's RBA monetary policy meeting.
It is expected that on June 7, the regulator will raise rates by 25 bps for the second time this year.
Recall that in May, the Reserve Bank of Australia for the first time in 11 years raised the indicator by a quarter-point, to 0.35%.
In theory, the tightening of the exchange rate should support the Aussie, but this will happen only if the Australian regulator decides to go the same aggressive way as its American counterpart.
Last month, the Fed raised rates by 50 bps at once, which triggered a dollar rally. There is an opinion that the RBA may present the same hawkish surprise tomorrow.
Expectations of more decisive steps have intensified after recent comments by Australian Treasurer Jim Chalmers. He said that the prices of essential goods, including food and gasoline, continue to rise, and this significantly increases inflation expectations.
"There is no point in being shy in expressions. Inflation is high and continues to accelerate, while real wages are falling faster than at any time in the last 2 decades," the official said.
Over the past year, prices for essential goods and services have increased by 6.6% in Australia. At the same time, in the first quarter, the annual inflation rate rose to 5.1% with a target of 2%.
Due to ongoing problems in global supply chains, the Australian government is already preparing the population for the worst-case scenarios in the coming months.
It is quite obvious that the Green Continent, like most developed countries, is facing a serious problem of inflation. And it requires a more decisive response than the minimum gesture of 25 bp.
Based on this, one of the largest banks in Australia, Westpac, predicts a June increase in the RBA rate by 40 bps, and AMP chief economist Shane Oliver does not exclude the possibility of an increase of 50 bps.
Another argument in favor of the fact that the Reserve Bank of Australia can take more aggressive measures to combat inflation is the unexpected growth of the country's GDP.
In the first quarter of this year, the Australian economy grew by 0.8%, which is 3.3% more than a year ago.
The rapid growth of the Australian economy is taking place against the background of signs of a slowdown in economic growth in America. It is this fact that gives hope for a steady rise of the Aussie this year.
Experts predict a further increase in Australian GDP. The country, which is one of the world's largest wheat exporters, can benefit from uncertainty about grain supplies from Ukraine.
Also, the country's economy will be in the black due to the rise in the price of iron ore. The market expects an increase in demand for fossil raw materials from China, which is gradually returning to normal life.
The lifting of quarantine in Chinese cities should increase interest in risky assets, which will lead to the end of the rally of safe-haven currencies. Against this background, raw materials will be the most attractive.
Now the Australian dollar ranks second after the Canadian loonie in terms of profitability among the group of 10. According to analysts of the Swiss bank UBS, both of these currencies claim to be the most promising this year.
Experts predict that by the end of 2022, the AUD/USD pair may rise by 11%, to levels that were last observed more than a year ago. We are talking about the 0.7600 mark.And at the end of the first quarter of next year, the Aussie has a chance to grow even more against the US dollar - up to 0.7800.
