Australian Dollar Poised to Climb 3% by Year-End as Fed Rate Cut Bets Weigh on USD

NAB strategist Ray Attrill sees the Australian dollar strengthening nearly 3% by year-end as Fed rate cut expectations and tariff risks pressure the U.S. dollar.Key TakeawaysNAB’s Ray Attrill forecasts the Australian dollar (AUD) to rise almost 3% by year-end.Fed rate cut bets and global tariff risks may weaken the U.S. dollar, supporting AUD.A hotter-than-expected CPI could shift expectations for the Reserve Bank of Australia’s (RBA) policy path.Fed Bets, Tariff Risks Boost AUD OutlookAccording to Jinshi Data, Ray Attrill, head of foreign exchange strategy at National Australia Bank (NAB), said growing market expectations for Federal Reserve rate cuts and mounting tariff concerns could weigh on the U.S. dollar (USD), paving the way for Australian dollar gains.He added that major Australian pension funds are already increasing exchange rate hedging, boosting demand for AUD.Inflation Data Could Fuel MomentumThe second-quarter CPI data, set to be released on Wednesday, could provide an additional push.If CPI comes in hotter than expected, traders may scale back expectations of more than two RBA rate cuts this year.The RBA’s cautious, gradual stance on monetary policy could further stabilize AUD sentiment.AUD Could Rise Nearly 3% by Year-EndAttrill projects the AUD to appreciate by around 3% by December 2025, supported by:A softer USD driven by Fed policy easing.Tariff-related uncertainty weakening the greenback’s safe-haven appeal.Ongoing hedging flows from institutional investors like pension funds.