AUD unsteady in face of China concern and metals sell off

Daily Currency Update

The AUD fell through trade on Monday, sliding back toward US$0.64 amid ongoing pessimism surrounding China’s property market, a sharp decline in iron ore prices and a broadly stronger USD. China’s second largest property developer Evergrande is again in the headlines after it abandoned a debt restructuring plan when it was revealed property sales were worse than expected and an ongoing investigation into its subsidiaries prevented it from issuing new bonds. Its share price plunged following the announcement, prompting a sell off across the industry and the broader Asian market. Both the Hang Seng and China’s CSI index closed the day lower, weighing on the Yuan and in turn the AUD. Added downward pressure came on the back of a broader sell off across industrial metals with iron ore prices tumbling by as much as 5%, while copper fell more than 1% and aluminum and zinc also moved lower. With pessimism surrounding China elevated and US treasury rates climbing to a fresh 16 year high the AUD is likely to remain under pressure through the near term. Having touched intraday highs at US$0.6445 the AUD fell steadily through the day marking intraday lows at US$0.6405 overnight.
Our attention turns now to tomorrow’s monthly CPI indicator.