TD Securities strategists Izidor Flajsman and Prashant Newnaha highlight that Australia is entering a rare phase of unilateral Reserve Bank of Australia (RBA) tightening, while the US Federal Reserve (Fed) is anticipated to begin an easing cycle. According to TD Securities, the RBA has been in hiking mode since February 2026, and the firm forecasts an additional rate hike in August. In contrast, the Fed is expected to implement three rate cuts between now and March 2027 [1].
The strategists emphasize that such unilateral RBA tightening regimes have been historically infrequent but have consistently supported the Australian Dollar (AUD), with appreciation often exceeding standard rate-differential forecasts. This historical pattern reinforces TD Securities' existing bullish bias on the AUD, which is also supported by Australia's status as a net energy exporter [1].
TD Securities notes that while unilateral RBA hiking cycles have been supportive for the AUD, they have been largely indifferent for AUD High-Quality Liquid Assets (HQLA) spreads. No specific market reactions or immediate price movements are mentioned in the article [1].
Looking forward, TD Securities maintains a bullish outlook for the AUD, citing the ongoing RBA tightening and Australia's energy export position as key factors likely to drive further appreciation of the currency [1].
CONCLUSION
TD Securities expects the Australian Dollar to benefit from a rare phase of unilateral RBA tightening, especially as the Fed moves toward easing. The firm's bullish AUD outlook is underpinned by anticipated further RBA hikes and Australia's net energy exporter status.