HKD/AUD Outlook:
Bearish, as the rate is below its recent average and near recent lows, with ongoing pressure from the HKD's central bank interventions.
Key drivers:
• Rate gap: The Reserve Bank of Australia has raised interest rates, while the Hong Kong Monetary Authority continues to defend its currency peg, creating pressure on the HKD.
• Commodities: Global oil prices remain high, supporting the Australian dollar due to its commodities link, which the HKD lacks.
• Macro factor: Recent data indicates Australia’s inflation is rising above target, leading to expectations of further rate hikes from the RBA, strengthening the AUD.
Range:
The HKD/AUD is likely to drift within its recent range, reflecting the current downward pressure on the HKD.
What could change it:
• Upside risk: Any signs of significant economic recovery in Hong Kong could strengthen the HKD against the AUD.
• Downside risk: Further interest rate increases by the RBA could exacerbate pressure on the HKD, driving the rate lower.
