A word on the Australian dollar (AUD), which came under significant pressure this morning, losing about 0.7% against the US Dollar (USD), Commerzbank’s FX analyst Volkmar Baur notes
AUD might be effected by China
“This was probably due to the fact that inflation was slightly lower than expected. There had been speculation that the Reserve Bank of Australia would have to raise interest rates again because of the recent rise in inflation. These expectations have now been priced out.”
“However, the AUD's strong reaction also seems to have something to do with the ongoing economic weakness in China. More than two-thirds of all Australian exports are commodities – with China the biggest buyer. If the economy, and in particular the housing market, remains weak in China, it will have an effect Australian exports and thus the currency.”
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