Jane Foley, head of FX strategy at Rabobank, suggests that given its geographical position and its trade links, the AUD is often traded as a proxy for Chinese growth.

"Although a Phase 1 trade deal between the US and China is thus positive for the AUD, the risks associated with its implementation and the potential that a phase 2 deal may never be signed are not. Slowing economic growth in Australia and the determination of the government to return a budget surplus suggest that there is the risk of further rate cuts from the RBA in 2020 and, when rates reached a floor of 0.25%, QE is likely to be invoked. While there may be some initial respite for the AUD, we see risk of renewed downside pressure on AUD/USD during 2020."