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20 Mar 2014
Further AUD losses ahead? - Westpac
FXStreet (Barcelona) - Sean Callow, Senior Currency Strategist at Westpac can see further AUD losses ahead.
Key Quotes
“AUD of course has lots of factors in play and admittedly was able to ignore some notable negatives for much of this week. Global risk appetite improved early in the week as investors decided that so long as Russia didn’t invade the rest of Ukraine and sanctions by the West remained fairly timid, they were happy to move on from Crimea.”
“Most notable for AUD though was the ability to push above 0.9100 despite deepening strains on the Chinese yuan. There has been no respite for yuan bulls, with CNY -2.5% and CNH -2.7% since 18 Feb, now returning the yuan to its lowest levels against USD since April 2013, wiping out a lot of gains investors probably thought were solid. The weekend announcement of a wider daily band for USD/CNY only produced sharper yuan losses. Officials talk of two-way price action but it has been virtually one-way for the past few weeks.”
“We have noted the strains this process is creating in other markets, such as commodities, where worryingly iron ore inventories in China have leapt 44% since Sep to new record highs."
"Australia’s domestic calendar has been very quiet and remains so in the week ahead, leaving AUD to trade on the global mood. Concerns over China’s economy and financial system aren’t likely to be allayed for some weeks yet. Not long after eking out marginal new 2014 highs around 0.9140, AUD/USD seems set to test the lower end of the past 6 weeks’ range, around 0.8890/0.8900.”
Key Quotes
“AUD of course has lots of factors in play and admittedly was able to ignore some notable negatives for much of this week. Global risk appetite improved early in the week as investors decided that so long as Russia didn’t invade the rest of Ukraine and sanctions by the West remained fairly timid, they were happy to move on from Crimea.”
“Most notable for AUD though was the ability to push above 0.9100 despite deepening strains on the Chinese yuan. There has been no respite for yuan bulls, with CNY -2.5% and CNH -2.7% since 18 Feb, now returning the yuan to its lowest levels against USD since April 2013, wiping out a lot of gains investors probably thought were solid. The weekend announcement of a wider daily band for USD/CNY only produced sharper yuan losses. Officials talk of two-way price action but it has been virtually one-way for the past few weeks.”
“We have noted the strains this process is creating in other markets, such as commodities, where worryingly iron ore inventories in China have leapt 44% since Sep to new record highs."
"Australia’s domestic calendar has been very quiet and remains so in the week ahead, leaving AUD to trade on the global mood. Concerns over China’s economy and financial system aren’t likely to be allayed for some weeks yet. Not long after eking out marginal new 2014 highs around 0.9140, AUD/USD seems set to test the lower end of the past 6 weeks’ range, around 0.8890/0.8900.”