The Australian dollar has sold off for the past three sessions and remains weak today. There has been limited news or economic data from Australia that has influenced the currency in the past 24 hours. However, there is some hope for a turnaround given positive news from China. Following significant net cash injections by the Chinese central bank, Chinese 10-year government bond yields are now falling below 4%. The Shanghai composite and other stock markets are also recovering. As Chinese financial markets become calmer, the Australian dollar is likely to benefit. Our outlook on the currency remains neutral.
AUD/USD is currently down and trading just above 0.7590. Looking at EUR/AUD, the pair is up and currently just above 1.5640. The GBP/AUD is up and the exchange rate is currently above 1.7670.
This is a very light week for economic data releases relating to the Australian dollar. On Thursday, we'll see HIA New Home Sales and AiG Performance of Manufacturing Index. Last week, the RBA’s meeting minutes suggested "considerable uncertainty" regarding future inflation and cautioned against strength in the currency.