AUD/USD has neared strong technical support at 0.79, and the speed at which the pair breaks it through will determine the speed of further AUD depreciation.
We need to remember that Australian economy is very sensitive to local currency appreciation, as it hurts trade and tourism activity due to more expensive goods and services. Given China is one of the key trade partners of Australia, we need to monitor the reports out of PRC, as they may be a leading indicator of future demand on Australian export.
And today we saw Chinese trade data. Both export and import has slowed the growth hinting the possibility of weaker demand from Beijing. And this is the first signal AUD may come under pressure, if the trend is confirmed.
And here is the second signal – Australian trade minister Ciobo had a moan about the strong Australian dollar. It won’t take long when other officials join the camp, and then the aussie selloff will be unstoppable.
By Helen Rush
Aug 08, 2017 03:03AM ET