Near term: Another 1-2 Fed hikes, lingering RMB softness and emerging global growth concerns may temporarily undermine AUD.

Broader term: Expect AUD to trade higher as Fed gets closer to end of tightening cycle, eventual China turnaround on expectations of stimulus and possibly warmer ties between Australia and China (i.e. timber, coal imports from AU resumed; barley, wine, hay, meat, crayfish potentially next while AU PM is likely to visit Beijing). Tourism, education and property sectors in Australia could benefit if relations between China and Australia further warm up, and this can be a positive for AUD.

Downside risks: 1/ extent of CNH swings; 2/ if USD strength or Fed tightening cycle unexpectedly extends; 3/ global growth outlook – if slowdown deteriorates; 4/ any market risk-off event or unexpected dovish tilt from RBA.