Selling AUD on pullbacks | Current Sentiment

The AUD will likely remain pressured after poor Chinese data, falling commodities, and the risk off tone set by falling equities. We will look at selling AUD on pullbacks for the session. AUDUSD and AUDJPY look like potential options, with the JPY catching safe haven bids and the positive Q3 GDP print.

Current Sentiment:

There was no major economic data out during yesterday’s NY session. Price action was largely dictated by falling commodities. Iron ore fell below $40 per metric tone while WTI continued its fall since the OPEC meeting, breaking below $38 per barrel, the lowest levels since 2009. The pressure in commodities saw AUD, NZD and CAD all fall dramatically against the buck during the session.

During Asia, Chinese Trade surplus missed expectations printing at 343b. Exports dropped 3.7% on the year, and imports sank 5.6% (based on Yuan). The drop in exports was the steepest contraction in three months. The negative data added more weight to an already pressured Asian equities market due to falling commodities. For the same reasons, the AUD remained pressured for the session, declining against all of it’s major counterparts.

On the other hand, the JPY has been supported on the back of haven flows due to declining equities and commodities markets. We also saw the release of Japan’s Final GDP for Q3 beat expectations, revised higher to 0.3% from the first estimate of -0.2%, and better than the consensus 0.1%.

Coming up during London we have the UK Halifax HPI report, as well as the UK Manufacturing Production print. These releases were covered in the weekly risk events video. You can watch it here.

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