The Australian Dollar depreciated again in September but the drop was more modest than in August. Economists at MUFG Bank analyze Aussie’s outlook.

AUD downside risks initially with reversal going into 2024

If US yields continue to grind higher it is very likely that we will see lows around where we got to last September/October time (0.6200). 

Whether China developments reinforce the move lower or help support AUD remains unclear but at this juncture, we see the China pessimism as likely to continue over the short term which will likely add to downside pressure for AUD/USD.

If we do go lower in AUD/USD we would expect the move to reverse as US economic activity slows into year-end and China policy stimulus starts to show through in China data.

 

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