AUD / USD has traded at its highest levels since early March this week. However, this week’s AUD gains come at a time when a weakening of US-China relations is raising concerns about the growth prospects of the world’s second largest economy and the country’s largest export partner. Australia, by Rabobank.
“As American suspicions of China extend to both sides of Washington’s political divide, tensions between the United States and China are expected to last well beyond the US elections, regardless either the result. This could pose difficulties for Australia. “
“If coal or iron ore, Australia’s main export, were considered to be the subject of Chinese reprisals, the risk to the country’s economy and to the AUD would be heightened.”
“We expect the AUD / USD 0.66 area to act as psychological resistance and we expect the AUD / USD to decline over a 1 to 3 month horizon.”
“As we approach the US presidential elections in November, we are witnessing a further decline towards the AUD / USD 0.60 zone.”