AUD/USD Falls On Chinese Rate Hike

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AUD/USD made a sharp fall after the Chinese central bank announced a rate hike. The news from China had a stronger impact than positive Australian news released earlier. It’s now supported in lower levels. Update.

The People’s Bank of China raised the rates by 0.25%. This move was expected, but the timing is never expected in China. A higher interest rate in China means less growth. Less Chinese growth means less imports of Australian commodities.

After the US dollar was badly hurt in recent weeks, it was time to rise – less Chinese growth also triggered risk aversive trading on global fears, pushing money into the “safe haven” dollar and yen.

These factors played against the Aussie – it fell from around 0.99 to around 0.9650. It now bounced back above 0.97. This line, 0.9650, served as a resistance line when the Aussie was climbing higher, and now worked as strong support, after other lines collapsed.

The lines above are 0.9750, 0.98 and 0.9850. Below, more support is found at 0.9465 and 0.9366.

This terrible drop in the Aussie came despite good news from Australia – the meeting minutes showed that the RBA is ready to raise the rates once again, after a long period of pauses. The Australian economy is doing really great. Also the sales of new vehicles posted a nice rise of 0.9%, better than last month.

But without Chinese strength, the Australian strength is endangered. Currently China is also doing well, and the sell off is based on fear as well as profit taking on the dollar fall.

Will the Aussie continue falling? Is it just a temporary retracement? We’ll get answers quite soon.

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About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

4 Comments

  1. After the US dollar was badly hurt in recent weeks, it was time to rise – less Chinese growth also triggered risk aversive trading on global fears, pushing money into the “safe haven” dollar and yen.

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  4. Pingback: AUD/USD Set to Fall On Chinese Rate Hike | Forex Crunch