OctaFX | OctaFX Forex Broker
Open trading account
Back

AUD/CNY trending lower to stay in tact - Westpac

Analysts at Westpac noted that the Australian dollar is about flat against the US dollar over the past 3 months, but also acknowledged that the Chinese yuan has rallied about 3%.

Key quotes

  • Clearly the key factor has been the steady progress towards the US-China trade deal which was finally signed last week.
  • The trade deal offers only limited tariff relief for China in exchange for a huge increase in purchases of US exports, which doesn’t seem overly bullish for the yuan.
  • But China has at least bought a period of trade truce with the US and if the US has a new president in 2021, the trade deal is likely to be scrapped.
  • AUD has background support from ongoing historically large trade surpluses, elevated equity prices and low volatility. But sub-trend growth and muted inflation are keeping markets leaning towards further RBA easing, which seems to be the main driver for AUD.
  • Our base case is for the RBA to cut the cash rate to 0.5% in Feb, followed later in the year by another cut and QE.
  • This outlook should keep AUD/CNY trending lower, even if recent yuan gains might be somewhat excessive. Any recoveries to above 4.80 are likely to fade, targeting the mid-4.60s multi-week/month.

China offers assurance that US trade deal won’t hurt Europe – Caixin

Caixin shared comments from China’s Vice Premier Han Zheng that poured cold water on the US President Donald Trump’s projections of $100 billion sales
Read more Previous

GBP/JPY looks for clear direction around 143.30 amid Brexit disappointment, risk-off

GBP/JPY remains modestly changed while trading around 143.35 during Wednesday’s Asian session. The pair struggled between upbeat UK data and broad ris
Read more Next
Start livechat