AUD/CNY Outlook:
Slightly positive, but likely to move sideways as the rate is above its recent average yet lacks a clear driver.
Key drivers:
• Rate gap: The Reserve Bank of Australia raised interest rates, while the People's Bank of China maintained a supportive approach, widening the rate differential.
• Risk/commodities: With rising commodity prices, demand for Australian exports is strengthening the AUD against the CNY.
• One macro factor: Australia's inflation rate has exceeded expectations, bolstering the likelihood of further rate hikes from the RBA.
Range:
The AUD/CNY rate is likely to hold within its recent range, with possibilities of mild fluctuations but no strong directional movement.
What could change it:
• Upside risk: A surprise further rate hike by the RBA could strengthen the AUD significantly.
• Downside risk: A sudden deterioration in global economic conditions could lead to a pullback in commodity prices, weakening the AUD.