AUD/USD to extend its fall into the 0.70-0.71 area in the coming days – ING
25.04.2022, 07:56

AUD/USD to extend its fall into the 0.70-0.71 area in the coming days – ING

We are seeing a correction in three of the currencies that had emerged as outperformers in the first phase of the Ukrainian conflict – the Chinese yuan, the Australian dollar and the New Zealand dollar. Unstable risk sentiment and China's battle against covid are raising the downside risks for commodity currencies, economists at ING report.

Commodity currencies in trouble

“The lack of any intervention by the People's Bank of China despite the elevated downside volatility in CNY may signal that China could be shifting to more growth-orientated currency management (i.e. welcoming a weaker yuan) at a time when tight containment measures are posing significant risks to the country’s economic outlook. Should markets receive more indications that this is the case, selling pressure on the yuan may well continue.”

“The commodity market is also absorbing China’s growth concerns, with energy and metals facing some considerable bearish momentum. This is another channel through which AUD and NZD are getting hit. We think the fall in AUD/USD might extend into the 0.70-0.71 area in the coming days.”

“The implications of unstable risk sentiment and commodity prices correcting lower are spreading to the whole commodity FX segment, which may struggle to find any firm support in the coming days.”

 

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