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Aussie Whipsaws Along with Chinese Stocks
The AUD whipsawed tumbling to a fresh 6-year low at 0.7255, before rebounding later in the trading session. The Aussie seemed to be moving in lockstep with the Chinese stock market which opened the trading session down 4%, and then continued to moved lower hitting a low down 5.2%, before climbing into the close to end the trading session down only 1.6%.
Policymakers in Beijing managed to engineer a rebound in equities, and seemed to be hell bend on putting a floor under Chinese stocks. China’s State Planner said it will quicken construction of key projects, while China government funds stepped in to buy stocks and the PBoC injected funds using reverse repos into money markets. The other commodity-correlating currencies, aside from the Aussie, also traded firmer amid this backdrop, although most equity markets in Asia remained in the red.
Markets will turn their attention to the U.S. and the FOMC, which begins its 2-day meeting today, though no one expects any surprises with the Fed likely to want to see more data before committing to a firmer signal on when rate lift-off will be seen.
After the RSI (relative strength index) moved into oversold territory with a print below 30, the AUD/USD bounced closing up on the session. Resistance on the currency pair is seen near the 10-day moving average at 0.7353, while target support is seen at the 2004 lows at 0.6830.
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