The Australian dollar is trading at around the .7850 cents market but is under pressure this morning.
“It (Aussie dollar) is looking vulnerable after it failed the .79 cents level on the back of Chinese data”, said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.
He added that “Once traders saw the weaker than expected Chinese data, they pushed the Aussie below the .79 cents level.”
However, McKenna pointed out that the Aussie dollar’s vulnerability at this stage is not just due to the weak Chinese data.
“The reason the Aussie is vulnerable is not just a recovery in the US dollar nor the recent softening of Chinese data,”
“The Aussie is vulnerable because there is every chance the minutes of the RBA’s monthly meeting – to be released today at 11.30am – will reflect a discussion on the negative impact of the strong currency on the Australian economy,”
“With positioning mega long and most fundamental valuations suggesting the Aussie dollar is fully priced it won’t take much for the Aussie to trade down and through last week’s lows to 78 cents – may be lower over the next week,” he said.
That makes the minutes from the last RBA board meeting – to be released at 11.30am this morning – even more important for the Australian dollar than usual, McKenna noted.
Of course, we know that RBA Governor Lowe said Friday that the RBA is not looking to intervene anytime soon.
“But there is every chance the minutes of the RBA’s monthly meeting will reflect a discussion on the negative impact of the strong currency on the Australian economy,” McKenna said.
He added that if the Aussie dollar continues to trade down the .78 cents level, it could give way to .77 cents over the next few weeks.
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