AUD/CNY Outlook: Slightly positive, but likely to move sideways, as the rate is above its recent average, but lacks a clear driver for further gains.
Key drivers:
• Rate gap: The Reserve Bank of Australia is signaling potential rate hikes, which supports the AUD against the PBOC's stable approach for the CNY.
• Risk/commodities: Recent strength in China's economic data has improved demand for Australian exports, particularly commodities like iron ore, enhancing the appeal of the AUD.
• One macro factor: Upcoming Australian Consumer Price Index data may influence market expectations and create volatility for the AUD.
Range: The AUD/CNY rate is likely to hold within its recent range, showing stable behavior around current levels.
What could change it:
• Upside risk: A significant improvement in global economic conditions could boost demand for Australian exports, further supporting the AUD.
• Downside risk: If the Chinese economy weakens beyond current expectations, this could lead to reduced demand for Australian commodities and pressure the AUD lower.
