Aussie sentiment sours

Adding to downward pressure, China’s latest inflation data, also on Wednesday, came in weaker than expected.

The country’s consumer price index slowed slightly to 1.4 per cent in July from a year earlier, missing market expectations, pressured by a 1.1 per cent annual fall in food prices. The producer price index (PPI) rose 5.5 per cent last month from a year earlier, unchanged from June.

Traders said the fact the dollar sold off in reaction to the Chinese data showed that sentiment towards the currency has soured.

“The aggressive sell off after Chinese CPI missed the mark was a combination of bad timing and low liquidity rather than anything else,” said OANDA head of trading Stephen Innes.

Rising geopolitical tensions added to the gloom, but it wasn’t just the Aussie that slid in the wake of the standoff between the US and North Korea.

There was a determined shift by investors into the safe-haven currencies of the Swiss franc and Japanese yen.

The Swiss currency recorded its biggest one-day gain against the euro since January 2015. The greenback was down 1.1 per cent against the franc, its worst drop in more than six weeks.



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