AUD should remain stable against the Chinese yuan - Westpac

Martina Song, Research Analyst at Westpac, suggests that the AUD should remain stable against the Chinese yuan in the weeks ahead, to around 5.10 over the next month and then dip to 5.00 during Q4 (both CNY and CNH).

Key Quotes

“We expect the RBA to remain on hold, their statement and minutes from the September meeting indicating no urgency to cut further. Commodity prices at present are also supportive.

There should be little further monetary easing from China as well, given concerns around growth in property prices in Tier 1 cities. The introduction of CNY into the IMF’s SDR basket too should keep USD/CNY/CNH trade stable and there is also the week-long National Day holiday in early October.

Anticipation of a Fed rate hike in December should keep the US dollar supported, though the downgrade in the long term projected funds rate at the September meeting should limit USD gains. We see AUD/USD falling to 0.74 by the end of the year and USD/CNY up to 6.75.”