FXStreet (Guatemala) – AUD/USD is currently trading at 0.7420 with a high of 0.7460 and a low of 0.7389.
AUD/USD is marginally lower as we progress through the Asian shift. The move in the major has come of the as China suspends trading across 50% of 2754 listed firms on the China Shanghai composite Index that opened down 6.9% at 3467.40.
AUD/USD fundamentals
Markets were a little surprised in the lack of plane dovishness in the RBA’s statement yesterday when the RBA left rates on hold. However, there is plenty of room as the bar remains very high at the Central Bank to act beneath.
In respect of China, Australia’s largest trading partner, Jane Foley, Senior Currency Strategist at Rabobank explained that weak demand for products is linked to slowing growth in China.
“In recent weeks the outlook for Chinese growth has become even more fragile given the $2.8 bln rout in the country’s stock market. Despite the fact that the Chinese authorities has been taking measures to restore confidence in stocks, price action suggests that investors are far from convinced. Further sharp declines in the equity market has the potential to increase downside risk to Chinese growth potential,” adding, “This undoubtedly would send ripples throughout the global economy We see the combination of weak commodities prices and slow Chinese growth as making the prospects of further rates cuts from the RBA more likely going forward.”
In respect of Greece, markets are preparing for a Grexit, and the Greek banks remain closed and Merkel says that there is still no underlying platform to commence discussions which leaves a great deal of uncertainty over the outlook for the eurozone and global markets, weighing on the Aussie and the safe-haven’s. We await the EU summit on Sunday and to see whether the Greeks meet the deadline of Friday 0830 GMT to submit their final proposal in full.
AUD/USD on commodities
AUSD/USD is also suffering on the commodity sector’s outlook. Analyst at Brown Brothers Harriman explained that Iron ore prices are back below $50 per metric ton. “The April-June rally proved to be short lived. Recent losses have accelerated due to concerns about slower construction activity in China as well as reports suggesting that Australia and Brazil are set to increase supply. Iron ore futures are down nearly 25% since mid-June, and set to test the April low near $47. Similarly, copper futures are off nearly 20% since May levels. There was a new cycle low in copper today below 240. Charts point to a test of the December 2008 low near 125.”
AUD/USD is technically
Karen Jones, chief analyst at Commerzbank explained that AUD/USD has sold off to and is recovering from the bottom of the 2015 channel at 0.7425 although offers a bearish outlook towards the base of the 2 year channel at 0.7193.
(Market News Provided by FXstreet)