Title: How China’s Economic Slowdown Could Impact the Australian Dollar (AUD) and New Zealand Dollar (NZD)
As the US Dollar (USD) weakens, the Australian Dollar (AUD) and New Zealand Dollar (NZD) have not been able to benefit, with both currencies facing slight declines this week, according to Commerzbank FX strategist Volkmar Baur.
AUD to suffer more than the NZD:
Baur notes that weak data from China is weighing down both currencies more than recession fears in the US. Australia’s higher dependency on Chinese exports, particularly in iron ore and coal, puts the AUD at a greater risk compared to the NZD. Approximately 35% of Australian exports and 25% of New Zealand exports go to China, with iron ore alone accounting for 26% of Australian exports.
The current high stockpiles of iron ore and coal in China could continue to pressure Australian exports in the coming months, especially if the property crisis in China persists. This economic slowdown in China is likely to impact the AUD more than the NZD.
Analysis:
The article highlights how China’s economic slowdown can affect the Australian Dollar and New Zealand Dollar differently due to their varying dependency on Chinese exports. Investors should monitor the situation closely, as a prolonged slowdown in China could lead to further declines in the AUD compared to the NZD. This information is crucial for individuals looking to make informed decisions regarding their investments and financial planning.