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Will AUD/NZD Finally Crater?
Over the past few weeks the commodity dollars have enjoyed quite a rally. The Aussie is up nearly four big figures in part on market disappointment over the Fed inaction but also because commodity price have bounced off their lows.
However, the rally may soon be snuffed out as investor begin to realize that the slowdown in China is about have a direct impact on Australian local demand. Yesterday’s Chinese Trade data was far more bearish than the headline reading as it showed a -17% decline in import, clearly suggesting that China’s growth continues to wane.
The true extent of this trend may be seen tomorrow when we get a glimpse at Australian employment data which is expected to print at 7K versus 17K the month prior. The real shock will come if the numbers turn negative in which case the rally in Aussie could come to an abrupt end and could push the unit through the key 1.0800 support in AUD/NZD as markets begin to steel themselves for further RBA cuts in order to stave off a recession.