TD Flags Mixed AUDUSD Outlook on Fiscal Loosening, Contained Wages

TD Securities sees a mixed near-term AUDUSD outlook as Australia's May budget fiscal loosening supports prolonged higher RBA rates, offset by contained wage growth limiting further hikes. The pair surged to 0.7151 after RBA's third straight 25bps hike to 4.35% on May 5 (8-1 vote), rebounding from 0.6550 post-soft Q1 CPI (0.6% q/q vs 0.8% exp.), with April's 4.3% inflation gauge lifting hike odds to 74%. Oil at $113/bbl from Iran tensions and China stimulus fuel gains, as HSBC/MUFG back carry appeal amid bank splits: NAB eyes June to 4.60%, TD August, CBA hold.