Can China’s stock market rescue package support the Australian Dollar (AUD)? Economists at Société Générale analyze Aussie’s outlook.
The AUD tracked Chinese equities over the past few years until a major break in 4Q23. As US rates eventually peaked and started to decline, the US Dollar fell in a pro-carry environment that benefited AUD/USD despite the slide in Asian stocks. However, 2024 looks more challenging, with AUD/USD declining in line with falling equities.
The Chinese authorities have just delivered a major rescue package to the stock market. If it succeeds in restoring investors’ confidence, Chinese stocks could eventually rescue the Australian Dollar.