AUD/USD at risk of dropping under 0.60 (unless China stimulates, big time)

Commonwealth Bank of Australia flagging the risk of a sharper decline for the Australian dollar. Say AUD will continue to underperform in 2023:

• We consider there is a growing risk that the Aussie dips
  below $0.60 before year-end.
• It will likely take a big Chinese
  stimulus package focused on commodity-intensive infrastructure
  spending to turn around the downtrend.

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The prospect of a big Chinese stimulus package seems remote. Despite the big words from the People’s Bank of China, for example, they delivered a very disappointing monetary stimulus today:

• PBOC Loan Prime Rates (LPR) CUT: 1-year 3.45% (prior 3.55%) & 5 year 4.2% (prior 4.20%)

If the Australian dollar continues to dribble lower it’ll be a factor for inflation, making imports more expensive at the margin.

This article was written by Eamonn Sheridan at www.forexlive.com. Source