TD Securities strategists Izidor Flajsman and Prashant Newnaha argue that Australia is entering a rare phase of unilateral RBA tightening, with the Fed expected to cut while the RBA continues hiking. They note that such regimes have historically been supportive for the Australian Dollar, reinforcing TD’s existing bullish AUD bias linked to further RBA hikes and Australia’s net energy exporter status.
"With the RBA in hiking mode since February 2026 and TD forecasting an additional hike in August, while simultaneously expecting the Fed to begin an easing cycle with three cuts between now and March 2027, Australia appears set to enter a rare phase of unilateral RBA tightening."
"Historically, unilateral RBA tightening regimes have been infrequent."
"Historically, unilateral RBA hiking regimes have been consistently supportive for AUD, with appreciation often exceeding standard rate-differential forecasts."
"This finding is consistent with TD's bullish AUD bias on the back of further RBA hikes as well as Australia being a net energy exporter."
"Unilateral RBA hiking cycles have historically been supportive for the AUD and largely indifferent for AUD HQLA spreads."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)