AUD/USD drops to 0.70 as iron ore futures drop
- AUD/USD is losing altitude after bearish outside day.
- Iron futures in China are down in early trade.
- The news of a financial fraud in China is likely weighing over the AUD.
AUD/USD is feeling the pull of gravity, possibly due to losses in iron ore futures and news of financial fraud in China.
At press time, the currency pair is trading near session low of 0.7002 hit soon before press time, having hit a high of 0.7020 earlier today.
The decline could be associated with the drop in the iron ore futures listed in China. The most active contract for September delivery listed on Dalian Commodity Exchange dipped 15 Yuan to open at 895 Yuan per tonne.
Iron ore is one of Australia’s top exports. As a result, the AUD often takes cues from the action in the iron ore market.
Apart from the losses in the iron ore, the AUD is likely feeling the heat of a financial fraud in China. After all, the Australia currency is widely considered a proxy for the world’s second largest economy.
Large Chinese wealth manager Noah Holdings Ltd. said last week that 3.4 billion Yuan of asset management products backed by entertainment-to-health care conglomerate Camsing Global’s accounts receivables from JD.com were in danger of default, according to Caixin.
Also as per latest news, a number of fund management companies have exposure to financing projects related to Coming founder and CEO Lo Ching’s companies.
The AUD could take a bigger hit if the alleged fraud spreads, leading to sharp losses in China’s equity markets.
Technical Levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
