Rates stabilised at the end of last week after a roller coaster for those considering an exchange involving Australian Dollars. The prolonged and severe slide in Chinese stock prices, and the global stock market in general, at the start of the week saw AUD weaken dramatically. For example, GBP/AUD jumped from 2.10 to 2.23. As markets stabilised and China intervened to stabilise their internal market and reassure investors, this was reversed and GBP/AUD fell back to around 2.14.
This relative stability established before last weekend was disturbed by further negative new coming out of China. GBP/AUD briefly hit 2.17 as the Chinese manufacturing sector was shown to how grown at the slowest pace in 3 years last month, and this calls into question future demand for Austrian metal ores.
Even the RBA’s decision to keep interest rates on hold rather than make any cuts wasn’t enough to keep AUD value moving in the ‘right’ direction for AUD sellers.
However, it must be noted that poor data has not necessarily lead to poor data in commodity currencies. For example the Canadian Dollar has shown how quickly economies can diversify to accommodate falling prices in other sectors. In a world of weak global growth investors are continuing to look for opportunities, so even slightly good news is treated well. GBP/AUD can quite easily change direction at any point.
It seems the saga is not quite over with China, but rates had been moving down gradually before this data release over the weekend.
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