HSBC weighs in on the recent AUD/USD movements, expressing reservations about a significant rebound. Even though the pair appears oversold at present levels, it seems to be held captive by China's property sector turbulence.
Key Points:
Impact of China's Property Sector: AUD/USD has experienced downward pressure, primarily influenced by the instability in China's property sector.
Valuation Metrics Vs. Real-world Influences: While short-term valuation metrics suggest AUD/USD might be oversold, a substantial recovery might remain elusive until China rolls out robust demand-side interventions for its property market.
Domestic Data and RBA's Potential Moves: Local Australian data scheduled for release this week, including the August RBA minutes, the Q2 wage price index, and July's labor market statistics, probably won't dilute the 17bp of anticipated cuts by the RBA by the close of 2024. Furthermore, HSBC believes the threshold for hiking is quite high, seeing only a slight deviation from the current 18bp projection.
Summary: HSBC's latest analysis on AUD/USD suggests a restrained optimism for the currency pair. Although it seems oversold at its current stance, larger dynamics, especially China's property market challenges, are casting a long shadow. The forthcoming Australian domestic data is also unlikely to offer any significant respite or change in the RBA's future policy trajectory.
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