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.

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:

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 Source