According to Sean Callow, Research Analyst at Westpac, there was cause for optimism over the Australian dollar early this week as China’s return from a week-long holiday meant a resumption of benchmark iron ore prices.
“Less helpful though for AUD/USD’s attempt to rally from 32 month lows near 0.70 was the poor sentiment in Chinese equities. This was a background concern for AUD but equity weakness was much harder to ignore when US markets posted their largest losses since February.”
“With specs already short, AUD/USD at least has the fuel for a rally if global conditions improve near term. If not however, there is little in the way of the 0.69 handle, especially with AUD potentially still suffering a little from domestic political uncertainty ahead of the 20 October byelection that could produce a minority government.”
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