Bias: Bearish-to-range-bound, as HKD/AUD is below the 90-day average and in the lower half of the 3-month range.
Key drivers:
- Rate gap: The Hong Kong Monetary Authority's recent interventions have led to very low interbank rates, while the Reserve Bank of Australia considers potential interest rate hikes, favoring the AUD.
- Risk/commodities: The Australian dollar has been pressured by disappointing Chinese inflation data, suggesting weaker demand for Australian exports, which may limit AUD's capacity to strengthen.
- One macro factor: Australia's upcoming economic data releases, particularly the Consumer Price Index and Labour Force reports, could impact the AUD in the near term.
Range: Expect HKD/AUD to hold within its recent range, as current pressures may prevent significant upward or downward movement for now.
What could change it:
- Upside risk: A surprise increase in Australian economic data or positive shifts in China's economic outlook could bolster the AUD.
- Downside risk: Continued weak data from China or further intervention from the HKMA to support the HKD could lead to additional weaknesses for HKD/AUD.