AUD/USD: Downside correction should fade in H1 with better prospects beyond – MUFG

After a positive January, the Australian Dollar turned lower in February and wiped out all the gains for the year. Economists at MUFG Bank expect the AUD/USD pair to recover in the second half of the year.

Further downside for AUD/USD over the short-term 

“With the Fed rhetoric so hawkish we suspect over the short-term, we can see further downside for AUD/USD.”

“China data will be important in March covering Jan/Feb and we may well see evidence of pent-up demand post re-opening that may help limit AUD downside.”

“China commodity-related demand and the scope for the Fed to pause at some point in Q2 should add to a renewed upturn in demand for AUD in H2 this year.”