The AUD is currently bearish against the TWD.
Key drivers include:
- The Reserve Bank of Australia's potential interest rate hikes could attract investment, supporting the AUD, but recent events have heightened concerns about Chinese demand, impacting Australia’s economy due to lower export needs.
- Ongoing disinflationary pressures in China, Australia's largest trading partner, are reinforcing a cautious outlook for the AUD.
- Rising inflation in Australia is a macro factor that could influence future monetary policy and the exchange rate.
Expect the AUD/TWD to trade within a modest range in the coming months, reflecting recent stability.
An upside risk could be stronger-than-expected Australian economic data, encouraging AUD gains, while a downside risk might arise from worsening economic sentiment in China, negatively impacting demand for Australian exports and thus the AUD.