Bias: Bearish-to-range-bound, as the AUD is below the 90-day average and in the lower half of the 3-month range.
Key drivers:
• Rate gap: The Reserve Bank of Australia is hinting at potential rate hikes, while the Bank of Thailand recently cut rates, widening the interest rate differential favoring the AUD.
• Risk/commodities: Oil prices are above their 3-month average, which might generally benefit the AUD as Australia is a commodity exporter; however, uncertainty in commodity demand impacts the currency.
• One macro factor: This week’s poor Chinese inflation data raises concerns about Australian export demand, particularly in key industries like iron ore.
Range: The AUD/THB is likely to remain stable within its recent range, potentially testing the lower end as domestic factors weigh on the currency.
What could change it:
• Upside risk: A positive shift in demand for Australian commodities could strengthen the AUD.
• Downside risk: Continued negative economic indicators from China may compel the AUD to test further lows against the THB.
