The uncertainty related to financial stability concerns has weighed on risk-sensitive currencies, and not least the Australian Dollar. Economists at Danske Bank expect the Aussie to struggle to gain ground.
Easing financial stability concerns could provide a modest lift in the near-term
“While reopening in China and the boost to relative rates are supportive for AUD all else equal, we emphasize that the broader risk sentiment remains the main driver for now.”
“Easing financial stability concerns could provide a modest lift to AUD/USD in the near-term, but over the longer horizon, we expect the broad USD strength and push towards maintaining global financial conditions restrictive to weigh on the cross.”