The AUD/USD pair slumped on dovish comments from RBA Governor Philip Lowe. In the view of economists at OCBC Bank, the aussie is set to challenge the 0.7250 level.

Preference to be short on the AUD

“RBA’s Lowe was explicit in questioning market expectation for RBA rate hikes in 2022 and early 2023, and reiterated that conditions for rate hike may not be in place before 2024.” 

“Lowe essentially corroborated the record number of AUD shorts added by the investment community in the latest week. Coupled with the extended tapering timeline, AUD optimism from RBA tapering should be doused.”

“Overlay with softening macro and risk cues, bias remains southbound.”

“0.7250 may be the next waypoint.”