The Australian Dollar (AUD) has returned to form, becoming the worst performing G10 currency on a 1-day view amid a broader risk-off sentiment in the market, notes Jane Foley, FX analyst at Rabobank.
Chinese growth concerns weigh on AUD
“The AUD’s poor performance is despite the risk that the RBA could raise interest rates at its August 6 policy meeting, but reflects the potential headwinds implied by continued weakness in the Chinese economy, as well as the Australian dollar’s historical status as the G10’s ‘high-risk’ currency. We view declines in AUD/NZD as buying opportunities.”
“AUD/USD has been firmly caught in the risk-off mood that dominates sentiment. In the early part of this month, AUD/USD was rallying as the USD weakened in response to rising expectations of a Fed rate cut in September. More recently, AUD has been weighed down by a wave of fears stemming from concerns about Chinese growth.”
“Australia currently has a small current account surplus. It also has a strong budget compared to its G10 peers and a relatively strong track record of GDP growth within the group. We see the strength of these fundamentals as limiting continued selling in the AUD and expect the Australian Dollar to find its footing against the USD ahead of the RBA’s policy meeting on August 6. We continue to target an AUD/NZD of 1.12 in the coming weeks.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
