Author: Rhys Miles
The AUD lost quite a bit of momentum leading into the Easter break and didn’t regain it yesterday offshore or early trade this morning. We start the week around 0.7130 after flirting with 0.7200 towards the middle of last week. Despite a continual appreciation in the price of iron ore and oil the AUD was the biggest loser trading lower against most of the majors on the back of diminished expectations of future Chinese monetary stimulus.
Compounding this was a solid fall in Chinese equities losing over 2% yesterday. Somewhat contradictory in the logic of the AUD’s fall was the reasoning that the expectations of reduced Chinese stimulus was as a result of improving Chinese economic fundamentals.
As clearly evidenced if you attempted to fill your car up over the Easter break, oil has risen sharply. With the US ending waivers to nations importing oil from Iran coupled with existing OPEC production cuts don’t expect your fuel price to come down any time soon.
Don’t be lulled into thinking this week will be quiet. We have local CPI out tomorrow and US GDP on Friday night our time so the potential for a sharp move is high.
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