GO Markets Forex Team
GO Markets
Despite relative stability across global markets overnight, the Australian dollar has continued its slide in the domestic session. The local unit’s correlation with commodity markets appears to be back on again courtesy of renewed concerns about China’s economic stability.
Monday’s less than inspiring PMI numbers out of China appears to be having a sustained effect, amid a weakening Yuan which is generally seen as a reflection of confidence in the economy. Notwithstanding the Peoples Bank of China’s ability to control its currency rate, outflows from the region, and the growing discrepancy between onshore and offshore RMB currency values, would suggests confidence is sliding. History shows this is a pretty good directive for the currencies highly reliant on demand from China.
At the time of writing the AUD is trading precariously above 71 US cents amid broad based USD strength across the board. Once again the exception is the Yen with the USDJPY pair sliding each of the three sessions of 2016.
Coming up the US this evening will be a few data points which may promote a bit of movement ahead of Friday’s official employment data. Certainly the ADP Employment gauge is seen as a precursor to NFP’s and the FOMC minutes will be closely watched. The minutes may reveal a little more about the Fed’s view of the year ahead. While we know the Fed plans to gradually increase rates and their projections suggest around 4 rate hikes over the year, markets need constant reassurance and will react to any titbits of information that confirms of contradicts expectations.
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