APAC Currency Corner -Aussie Slide


The Aussie took it on the chin from numerous angles overnight. The weaker Chinese trade data and the accompanying move lower in commodity prices have led to USD buying against commodity currencies. The Aussie, already reeling from the RBA inflation downgrade, was particularly vulnerable to the correction lower in both Iron Ore and Copper prices,(  Iron Ore fell 5.8%, Copper fell 2.3%)  with the currency testing the 73 support level on several occasions.

However, whats’s  becoming clearer to traders as we move deeper into Q2  is that the stimulus effects in China are showing signs of fading ,and with a  growing consensus that further aggressive policy easing is unlikely from Mainland , we could be in for some dark days in the commodity and emerging markets space. Remember much of the global emerging markets recovery this year had been dictated by reduced fears of a hard landing in China and the subsequent rally in commodity prices.

Adding more fuel to the fires is lower  oil prices after traders reduced long positions fearing the new Saudi cabinet shuffle could result in increased Global OIL supply.  Risk off tone has been permeating the market for the past week and falling oil prices overnight should   increase investor pessimism.

There’s a growing preference to be short risk currencies in this environment, particularly the Aussie dollar given its susceptibility to deteriorating hard commodity prices.


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes