According to Greg Gibbs, Analyst at Amplifying Global FX Capital, there are some significant risks for the AUD that may continue to weigh on the currency.
Key Quotes
“In fact, they provide a scenario where the AUD could yet fall substantially.
- The first of course is China and the down-draft that may arise from weaker Chinese financial assets and currency.
- A second is if broader weakness in the Chinese economy does spill over to Chinese steel and related commodity prices.
- A third is the weaker Australian housing market and the pressure being exerted on banks to tighten lending standards in the wake of the Hayne Royal Commission into misconduct in the financial services industry.
- A fourth in a likely change in government in Australia at the next general election expected by May next year. A change to a Labor Party government raises downside risks for the housing market, pursuing a policy of removing negative gearing and halving capital gains tax concessions for investments in housing.”
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