The Australian dollar is slightly weaker this morning. Given the lack of news and economic data in the past 24 hours, the currency has not moved much. Looking at China, the PBoC fixed onshore CNY at the strongest level since October 12, but the yuan has since weakened. USD/CNH is trading just above 6.60 this morning. The biggest focus in Asia-Pacific has been on rising Chinese 10-year bond yields and a sharp fall in the Shanghai Composite yesterday. As China attempts to reduce credit growth, cracks in its financial system are beginning to appear. A sharp fall in Chinese growth is negative for the Aussie.
AUD/USD is currently down and trading just above 0.7610. Looking at EUR/AUD, the pair is up and currently just above 1.5560. The GBP/AUD is also up and the exchange rate is currently above 1.7490.
This is a very light week for economic data releases relating to the Australian dollar. The RBA’s meeting minutes suggested "considerable uncertainty" regarding future inflation and cautioned against strength in the currency. Last week, wage growth and employment changes missed expectations.
After weakening sharply in the latter half of October, we are downgrading the Australian dollar further to bearish. The currency is weak thanks to lower-than-expected inflation rates and falling Australian bond yields. Looking at a weekly chart, the Aussie has re-entered normal trading conditions having been overbought for most of September. Our analysis is based on various technical indicators.