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AUD: BofA: AUD/USD Only Likely To Move > 0.70 If Chinese Demand Indicators Turn

AUD
RegionGlobalBulletAPACForeign Exchange BulletsAustraliaMarkets

Bank of America believe that an AUD/USD move above 0.70 is “only likely when lead indicators for Chinese imports from Australia - credit impulse, steel production, new home sales - turn positive.”

  • They note that “iron ore maintains a large share of Australian exports but prices have a tenuous historical relationship with AUD FX for a variety of reasons.”
  • “While AUD's beta to iron ore is close to zero, the corresponding beta to a broader measure of China reflation sentiment (outlined above) is at historical highs.”
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Bank of America believe that an AUD/USD move above 0.70 is “only likely when lead indicators for Chinese imports from Australia - credit impulse, steel production, new home sales - turn positive.”

  • They note that “iron ore maintains a large share of Australian exports but prices have a tenuous historical relationship with AUD FX for a variety of reasons.”
  • “While AUD's beta to iron ore is close to zero, the corresponding beta to a broader measure of China reflation sentiment (outlined above) is at historical highs.”