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RIsk-off momentum keeps pressure on the AUD

Published August 16, 2018

Author: Dennis Li

We saw the Aussie moving sideways overnight after touching its support of 0.7200 against the USD yesterday afternoon. Under the global risk-off sentiment feeding into a stronger USD and a major commodities sell-off, the AUD, seen as a proxy currency to emerging markets and the Chinese economy appears to be destined to test the next major support at 0.7150 against the greenback.

  • The Turkish lira rallied in the last 24 hrs as Qatar pledged $15 billion in investment to Turkey while the US ruled out removing steel tariffs until the release of a US pastor who was on terrorism charges in Turkey.
  • While fears of a crisis in Turkey still loomed, focus was shifted to China as the CNH stumbled by nearly 0.8% to 6.8924 per USD, its lowest since January 2017 following disappointing economic data earlier this week.
  • The upbeat US data on domestic retail sales, manufacturing output and worker productivity released overnight supported the greenback and the expectations that the Fed will raise interest rates in September for the third time this year.
  • The stronger dollar also put commodities under pressure across the board, with copper hitting a 12-month low and gold at an 18-month low. Oil was also down by more than 3.5% overnight.
  • The UK inflation rose in July for the first time in 2018 but was considered as a blip and inflation might fall faster than the BoE thinks according to UK officials.