Not convinced by Australian dollar rally – Credit Agricole

AUD/USD down 7 pips to 0.7409 today

Credit Agricole CIB Research discusses AUD outlook and highlights 2 reasons for staying cautious on the currency around current levels.

“The deal between US Democrats and Republicans to extend the debt
ceiling and avoid a sovereign default has led to a rally in risk and the
AUD and less so the NZD. The AUD has also been helped by a rally in
iron ore post the Golden Week holiday period in China,” CACIB notes. 

We are not completely convinced by this rally just yet. First, the US debt ceiling deal has simply kicked the can down the road. Second,
while our China economist expects electricity rationing to have peaked
in September, China will still likely hold back steel production for
longer than usual during winter in order to keep the air around Beijing
clear for the winter Olympics,” CACIB adds.

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