China woes weigh on CNY, commodities and Aussie
FX markets across the region were sent sharply lower on Monday as worries about last week’s weaker CNY loan growth numbers drove sentiment ahead of today’s key monthly Chinese data releases.
The AUD/USD fell to the lowest level since November last year while the Chinese yuan also fell to the lowest level versus the US dollar since November last year.
Commodity markets were also down on the China worries with crude oil falling 0.9% and touching a one-week low.
However, a late rally in US sharemarkets saved the day, with key markets rebounding from earlier lows. The S&P 500 gained 0.6%.
USD/JPY rises to “make-or-break” level
The AUD/USD ended down 0.2% after recovering from nine-month lows.
The NZD/USD also ended with a 0.2% loss.
Other key markets were weaker versus the US dollar, with the EUR/USD down 0.4% while the GBP/USD lost 0.2%.
The most notable move was in the USD/JPY with the greenback’s strength pushing the USD/JPY above the 145.00 level that is seen as the “line in the sand” for intervention from Japanese authorities.
This move to such a key level creates the risk of intervention from Japan’s Ministry of Finance and could see the USD/JPY sent rapidly lower – also causing the USD to weaken in other markets.
Aussie wages also in focus
Today, all eyes will be on the Chinese monthly economic releases. Industrial production, retail sales and fixed asset investment are all due at midday (AEST).
Australian data will also be in focus with the quarterly wage price index numbers released at 11.30am.
Wages data is key for inflation expectations, although economists debate whether wages are a leading or lagging indicator. Regardless, the Reserve Bank of Australia looks for wages to be about 100 basis points above the RBA’s inflation target, so a result of 4.0% or lower should not create any great concerns for the RBA.
The market is looking for 0.9% for the quarter and 3.7% for the year – broadly in line with last quarter’s results.
Aussie, CNY hit ahead of China data
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 14 – 18 August
All times AEST
Have a question? [email protected]
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
