AUD/CNY Outlook:
The AUD/CNY exchange rate is likely to increase, currently trading significantly above its recent average and near recent highs. The positive movement is supported by stronger Australian economic data, particularly in the employment sector.
Key drivers:
• Rate gap: The Reserve Bank of Australia's current monetary policy suggests a potential for rate hikes, contrasting with the People’s Bank of China's more stable stance.
• Risk/commodities: With strong demand from China's recovering economy, commodity prices relevant to Australia, such as iron ore, are likely to support the AUD.
• Macro factor: Increased consumer confidence in Australia indicates stronger domestic conditions, which could further support the AUD's strength.
Range:
Expect the AUD/CNY to hold steady or drift upwards within its recent trading range.
What could change it:
• Upside risk: A significant rise in commodity prices could further bolster the AUD.
• Downside risk: Renewed geopolitical tensions affecting China could negatively impact the CNY and shift the rate dynamics.