Home›Forex›Major Pairs›Goldman says AUD link to China weakens after accountin…

Goldman says AUD link to China weakens after accounting for US dollar

After controlling for the US dollar, Goldman finds only the AUD and NZD still show a meaningful positive relationship with the yuan, but the correlation is notably weaker.

Reported · Written up by our desk · Major Pairs

SCMP Economy reports that Australian dollar traders are increasingly focused on Beijing, with some analysts arguing that Chinese policy support for domestic growth could lift the AUD. In a report released Tuesday, Goldman Sachs said the connection is more selective than it appears at first glance.

According to Goldman analyst Lexi Kanter, the AUD looks among the most China sensitive of the G10 currencies. The report said Australia ranks as the G10 economy most exposed to an acceleration in Chinese final domestic demand, reflecting both direct exports and Australian inputs used by third countries to produce goods ultimately sold to China.

SCMP Economy notes, however, that much of the apparent AUD yuan relationship stems from both currencies moving with broad shifts in the US dollar. After controlling for the US dollar, only the Australian and New Zealand dollars retained a meaningful positive relationship with the yuan, and the link became notably weaker, the report said.

More like this

Sources