As with the RBA rate cut, the decision on a cut in Australia\s main trading partner, China, did not have the exact effect that one would have thought about.
What’s going on with the Aussie? The team at BNP Paribas explains:
Here is their view, courtesy of eFXnews:
In this regard, BNP Paribas’ economists expect further easing to be delivered, but looser policy in China is unlikely to feed through to stronger commodity currencies in G10.
“The Chinese economy is facing some substantial headwinds, which coupled Fed rate hikes later this year, should keep the AUD and the NZD underpressure,” BNPP projects.
“We view that AUDUSD appears vulnerable at current levels with the rates market having largely priced out expectations for a further rate cut this year and our Positioning Analysis indicating that net AUD positioning is close to neutral levels,” BNPP argues.
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