AUD/USD managed to recover from the lows, riding on positive Chinese data among other things. What’s next?
Here is their view, courtesy of eFXnews:
The Australian dollar has been the clear winner over the first fortnight of the year, with stronger iron ore, copper, and coal prices pushing the currency to the top of the leaderboard. But it might be time for Aussie bulls to take some gains.
Iron ore will be susceptible to the prospect of additional supply this year, while elevated levels of household debt are likely to restrain consumption in 2017. But the biggest risk to the currency emanates from outside its borders. China continues to sell reserves, but the yuan continues its slow bleed.
Further yuan depreciation will hurt Australia’s exports, of which more than 40% go to China, and a bumpier ride in 2017 for the Middle Kingdom would be even worse.
For lots more FX trades from major banks, sign up to eFXplus
By signing up to eFXplus via the link above, you are directly supporting Forex Crunch.