AUD/CNY Outlook: Bullish, as the rate is currently at a 90-day high, well above its recent average, supported by expectations of RBA rate hikes.
Key drivers:
• Rate gap: The Reserve Bank of Australia is preparing to increase interest rates, contrasting with the People's Bank of China, which aims to stabilize the yuan.
• Risk/commodities: High metal prices continue to support the Australian dollar, despite mixed signals from global markets regarding demand for exports.
• One macro factor: China's uneven economic recovery has affected demand for Australian commodities, but RBA's potential tightening may provide a cushion for the AUD.
Range: The AUD/CNY is expected to hold near current highs but could drift within its stable recent range.
What could change it:
• Upside risk: A stronger-than-expected Australian employment report could further boost the AUD.
• Downside risk: Any abrupt change in China’s economic performance, especially in key sectors, could pressure the AUD lower.