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Investing.com - The Australian dollar fell below 0.65 against the U.S. dollar, pressured by a slight strengthening in the greenback and disappointing domestic employment figures that showed unemployment reaching its highest level since November 2021.
UBS maintains its forecast that the Reserve Bank of Australia will implement three 25-basis-point rate cuts in August, November, and February, bringing the cash rate to a terminal level of 3.1%. The bank’s outlook comes amid signs of cooling in the Australian labor market.
The next significant data release will be the second-quarter CPI figures on July 30, with UBS expecting both headline inflation and trimmed mean inflation to slightly exceed the RBA’s forecasts. These inflation readings will be crucial for confirming the central bank’s expected policy direction.
UBS strategists recommend selling the downside in AUD/USD and suggest establishing long positions at levels of 0.64 or below. The investment bank views the current weakness as a potential buying opportunity.
For investors looking to establish long positions in the Australian dollar, UBS also recommends considering AUD/CHF and AUD/CNY as alternative currency pairs that may offer favorable entry points.
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