Barclays maintains bullish view on Australian dollar

Barclays reaffirmed a bullish stance on the Australian dollar, though with slightly less conviction than before. The bank said AUD is supported by Australia’s role as a beneficiary of the AI-driven commodity super cycle, which should improve terms of trade and underpin the economy. Barclays also pointed to positive hedging flows and argued that markets have priced out further Reserve Bank of Australia rate hikes too quickly. Offsetting these positives, the bank flagged housing-related macroprudential measures as a downside risk that could weigh on growth and currency sentiment. Overall, the note is supportive for AUD/USD, but the bullish view is tempered by policy and housing risks.