The current market bias for the AUD/CNY exchange rate is range-bound.
Key drivers include:
- Interest rate differential: The Reserve Bank of Australia's anticipated rate hike in early 2026 could strengthen the AUD relative to the CNY as the People's Bank of China is expected to maintain a cautious monetary policy.
- Risk sentiment: Ongoing global trade dynamics can influence the AUD, especially given its connections to commodities, while the CNY may benefit from easing trade tensions.
- Macroeconomic outlook: China's economic growth target of around 5% for 2026 may bolster the CNY if successfully achieved, despite previous struggles.
In the near term, the AUD/CNY is anticipated to trade within a stable range, reflecting its recent activity and market averages.
An upside risk could stem from stronger than expected commodity prices boosting the AUD, while a downside risk may arise if the Chinese government implements aggressive monetary easing measures that weaken the CNY.