AUD/HKD Outlook: The AUD/HKD exchange rate is likely to increase, supported by its position above the recent average and factors favoring the Australian dollar.
Key drivers:
• Rate gap: The Reserve Bank of Australia's potential interest rate hike contrasts with the low rates in Hong Kong, making AUD relatively more attractive.
• Risk/commodities: Rising commodity prices have bolstered the AUD’s strength, although recent declines in certain exports, like iron ore, present challenges.
• One macro factor: China’s economic slowdown negatively affects demand for Australian exports, keeping pressure on the AUD.
Range: The AUD/HKD is expected to drift within its recent range as volatility remains, influenced by external factors.
What could change it:
• Upside risk: A stronger-than-expected producer price index could reinforce market expectations for tighter RBA policy.
• Downside risk: Any significant worsening in China’s economic outlook could further weaken demand for Australian commodities and impact the AUD negatively.
