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Oct 24 - 10:55 PM

AUD/USD - COMMENT:AUD/USD Dented By Fresh China Growth Concerns

By John Noonan  —  Oct 24 - 08:25 PM

The Australian dollar was the worst performing major currency on Monday, as its role as a proxy for China sentiment drew waves of selling.

The 20th China Communist Party Congress concluded Sunday with China President Xi Jinping securing a precedent-breaking third leadership term.
This was factored in, but global investors were rattled by the introduction of a leadership team stacked with loyalists - prioritising China's rivalry with the U.S. over economic reform.

The market reaction was severe, with Hong Kong's Hang Seng index diving around 6.5% while U.S.-listed shares of Chinese companies collapsed over 10%.

The AUD fell 1.28% against the USD and 1.41% against the Euro despite a strong gain on Wall Street on hopes of a dovish Fed pivot and weak EZ PMI data - suggesting the Euro zone is heading for a recession.

Key for the direction of the Australian dollar will be whether investor concerns over China's growth trajectory translate into weaker commodity prices.
A fall in iron ore, copper and energy prices would undermine Australia's very strong terms of trade.

The AUD/USD managed to close above the 10-day moving average, which came in at 0.6291 on Monday and ascends to 0.6297 today.
A close below that line would warn that momentum is shifting to the downside and sets up for another move towards the 2022 trend low at 0.6170.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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