China is facing economic concerns as evidenced by sluggish retail sales, substantial declines in imports and exports, and the recent filing for bankruptcy by Evergrande.
AUD/USD faces headwinds amid China’s economic woes, mixed Fed signals
The minutes from the US Federal Reserve emphasize a dedication to the 2% inflation target, while also expressing a sense of prudence regarding the potential risks of excessive tightening.
Market participants are closely observing the upcoming S&P Global PMIs in Australia, along with a series of US data releases. Additionally, insights from Powell’s speech at Jackson Hole are eagerly anticipated as potential indicators for market direction.
Despite posting minor declines in the short term, AUD/USD sustained weekly losses of 1.41% due to persistently gloomy market sentiment influenced by China’s economic circumstances, which impacted investor confidence. This, coupled with global bond yields reflecting traders’ anticipation of further tightening measures, continued to exert downward pressure on the Australian Dollar (AUD) for an uninterrupted eighth day. The trading week concluded with AUD/USD settling at 0.6401, marking a marginal dip of 0.02%.
For the eighth consecutive day, the Australian Dollar remains under strain, with the prevailing influence of China’s economic instability and the impact of global bond yields weighing heavily on market sentiment.
Over the past fortnight, China’s economic landscape presents a concerning outlook, characterized by below-par retail sales, significant declines in imports and exports, and a slowdown in business activity. These factors, combined with the news of Evergrande’s bankruptcy filing in New York, contribute to the ongoing economic turbulence in the world’s second-largest economy.