Bias: The bias for AUD/HKD is bullish-to-range-bound, as it is currently above the 90-day average and in the upper half of the 3-month range.
Key drivers:
- Rate gap: The Reserve Bank of Australia is considering potential rate hikes, which may increase demand for the AUD compared to the stable interest rates maintained by the Hong Kong Monetary Authority.
- Risk/commodities: A higher oil price is generally beneficial for the AUD, supporting it as a commodity currency, while concerns about weaker demand from China hurt its outlook.
- China's economic recovery: The wavering recovery in China continues to affect Australian exports, which puts pressure on the AUD.
Range: It is likely that AUD/HKD will hold steady around current levels but may drift within the recent range as uncertainty persists.
What could change it:
- Upside risk: A strong economic rebound in China could significantly boost demand for Australian exports and support the AUD.
- Downside risk: A deeper-than-expected downturn in the Australian economy or disappointing upcoming economic data could weaken the AUD versus the HKD.