Bias: range-bound, current AUD/CNY sits near the 90-day average and in the upper half of the 3-month range.
Key drivers:
- Rate gap: The RBA is signaling possible rate hikes in the next year, while the PBOC maintains policy support to stabilise the yuan, keeping the pair oscillating in a narrow band as investors weigh policy outlooks.
- Risk/commodities: A softer tilt in China’s inflation and demand for Australian exports reduces commodity support for the AUD, nudging AUD/CNY lower as iron ore and coal prices take a softer turn.
- One macro factor: China inflation cooled in December, reinforcing caution on consumer demand and reshaping the yuan outlook amid softer growth signals.
Range: Range-bound trading is likely to persist, with mild drift toward the upper end as policy expectations evolve and traders position for data.
What could change it:
Upside risk: A clearer hawkish tilt from the RBA or stronger Australian data that lifts yield appeal.
Downside risk: Softer Chinese data or a renewed PBOC easing path that strengthens the yuan and weighs on the AUD.
