The Australian dollar is falling once again under the round 0.90 line. Various forces are behind the downwards move..
Here are three reasons. Is this the real break?
- China: Chinese Foreign Direct Investment is down 1.8% for August and around 14% y/y. This weakness from Australia’s No. 1 trade partner joins disappointing data from the weekend, showing that industrial output is rising at the lowest level since 2008.
- RBA: The Reserve Bank of Australia expressed its wish to see a weaker Australian dollar via its monetary policy meeting minutes and through a speech by Assistant Governor Christopher Kent.
- USD strength: After a wide sell off of the dollar following the weak industrial output numbers yesterday, the greenback is rising once again: the pound, euro and other currencies began the day lower, without specific triggers. The FOMC meeting looms.
The chart shows that the pair managed to bounce after falling to 0.8985 yesterday, and it even managed to close the gap. This is not the first time that we see a bounce on the 0.90 level. We had false alarms several times in the past.
Perhaps the full answer is in the hands of Janet Yellen. For more, see the AUDUSD forecast.
