Australian Dollar edges lower due to rising concerns over Chinese economic outlook
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The Australian Dollar depreciates as analysts noted that the weak economic data indicates serious challenges for the China’s economic outlook. The Aussie Dollar’s downside could be restrained due to hawkish sentiment surrounding the Reserve Bank of Australia’s policy outlook. The US Dollar struggles due to rising odds of the Federal Reserve implementing a bumper rate cut on Wednesday. The Australian Dollar (AUD) retraces its recent gains against the US Dollar (USD) on Tuesday, largely due to growing concerns over the health of China’s economy. Analysts point out that the latest round of weak economic data indicates serious challenges for the world’s second-largest economy. Since China is a key trading partner for Australia, fluctuations in China’s economic health can have a significant effect on the Australian market. Economists at Goldman Sachs and Citi have reduced their 2024 GDP growth forecasts for China to 4.7%, falling short of Beijing’s target of around 5.0%. SocGen describes the situation as a “downward spiral,” while Barclays calls it “from bad to worse” and a “vicious cycle.” Morgan Stanley also cautions that “things could get worse before they get better,” according to a Reuters report. The AUD/USD pair’s downside may be limited, as the Australian Dollar remains supported by the Reserve Bank of Australia’s (RBA) hawkish stance. Meanwhile, the US Dollar faces pressure amid increasing expectations that the US Federal Reserve (Fed) may implement an aggressive 50 basis points rate cut on Wednesday. According to the CME FedWatch Tool, markets anticipate 38.0% odds of a 25 basis point (bps) rate cut by the Fed at its September meeting. The likelihood of a 50 bps rate cut has increased to 62.0%, up from 50.0% a day ago. Daily Digest Market Movers: Australian Dollar inches lower due to fears over China’s outlook ANZ-Roy Morgan Consumer Confidence climbed 1.8…
Filed under: News - @ September 17, 2024 2:17 am