China seen as a risk for AUD - AmpGFX

Greg Gibbs, Founder, Analyst, & PM, Amplifying Global FX Capital Pty Ltd explained that an Australian financial services company explained that there are domestic risks for the AUD coming from a slowing housing market, fallout from the Royal Commision into the financial sector, and a national election coming into focus.  

Key Quotes:

"China is seen as a risk for AUD, with its trade friction with the USA and plans to rein in its shadow-banking sector. "

"However, current economic trends are quite supportive for the AUD. Stronger commodity prices and strong employment growth boosted the Government budget.  Business surveys of current conditions are running at record highs. "

"The RBA is forecasting above-trend growth over several years. Recent Chinese data remains solid, including a strong trade report, and Chinese commodity prices have firmed in the last month. "

"Australia’s trade balance is in surplus."

"We see further downside for the AUD, largely on upside risk for the USD and weaker EM assets, but we note that a weaker AUD may only further boost current conditions and inflation pressure in Australia.  At some point, it could bring forward rate hike expectations."