Can China’s stock market rescue package support the Australian Dollar (AUD)? Economists at Société Générale analyze Aussie’s outlook.

Chinese stocks to the AUD’s rescue?

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.