Commonwealth Bank of Australia flagging the risk of a sharper decline for the Australian dollar. Say AUD will continue to underperform in 2023:
- We consider there is a growing risk that the Aussie dips below $0.60 before year-end.
- It will likely take a big Chinese stimulus package focused on commodity-intensive infrastructure spending to turn around the downtrend.
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The prospect of a big Chinese stimulus package seems remote. Despite the big words from the People's Bank of China, for example, they delivered a very disappointing monetary stimulus today:
If the Australian dollar continues to dribble lower it'll be a factor for inflation , making imports more expensive at the margin.
