The key points are:
The $A has been hit since September by the return of Trump, a hawkish pivot by the Fed versus the RBA and concerns about the outlook for iron ore prices.
We doubt the fall is significant enough to boost inflation much and shouldn’t stop the RBA easing in February if underlying (or trimmed mean) inflation falls as expected.
In any case, it’s now had a bit of a bounce from oversold levels as Trump has refrained from Day One tariffs opting for government agencies to investigate unfair trade & tariffs and reportedly more of a negotiating approach.
The $A could be stuck between $US0.60 and $US0.70, but with the risk skewed to the downside if Trump acts more aggressively on tariffs in the months ahead. Note that Trump still said in his inaugural speech that tariffs are coming.