According to economists at Société Générale, the Australian Dollar (AUD) is at risk of further losses due to China’s economic problems. The AUD has already experienced a 7% decline since forming a double-top in June and July at 0.69, and economists believe that further losses are possible.
The July data from China has been disappointing, missing market expectations by a wide margin. This indicates that China is facing all-out deflation. The contraction in Chinese demand for Australian commodities, particularly iron ore, and the softer Chinese stocks are putting the AUD/USD currency pair at even greater risk.
Antipodean currencies, including the Australian Dollar, are highly exposed to China’s economic issues. As China is one of Australia’s largest trading partners, any downturn in the Chinese economy has a significant impact on the Australian Dollar.
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What potential risks does the AUD/USD currency pair face as a result of China’s economic challenges and the contraction in Chinese demand for Australian commodities
According to economists at Société Générale, the Australian Dollar (AUD) is facing a potential downward spiral due to China’s economic woes. The AUD has already seen a significant 7% decline since forming a double-top in June and July at 0.69, and experts believe that there might be further losses on the horizon.
The latest data from China, especially the disappointing July figures, have failed to meet market expectations by a significant margin. This indicates a worrying trend of deflation for China’s economy, which in turn has led to a contraction in Chinese demand for Australian commodities, particularly iron ore. The softer Chinese stocks are also posing a further risk to the AUD/USD currency pair.
The Australian Dollar, along with other antipodean currencies, is highly susceptible to China’s economic challenges. Being one of Australia’s largest trading partners, any downturn in China’s economy inevitably has a substantial impact on the Australian Dollar.
Investors are strongly urged to conduct their own extensive research before making any investment decisions. The information provided in this report should not be seen as a definitive recommendation to buy or sell any assets. It is crucial to understand that investing in open markets comes with a high level of risk, including the potential loss of principal.
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It is important to note that the author and FXStreet are not registered investment advisors, and this article should not be considered as investment advice.
I hope the economic situation in China improves soon to avoid further losses for AUD/USD.