SYDNEY: The Aussie dollar is trading at $0.736 against the US dollar this morning. It’s fallen 0.18% against the greenback, slightly down on last week. But the real test for the Aussie will come later this week.
The main concern for traders is the release of minutes from the Federal Reserve’s July meeting. The minutes are set for release this Thursday. That’ll give us a better indication of where US interest rates are heading. Until that becomes clearer, the dollar isn’t likely to budge too much.
Any confirmation that rates are heading up in the US will weigh on the Aussie dollar. But at least the volatility of last week is behind us.
The Aussie dollar had fallen on the back of China’s yuan devaluations. The Chinese central bank debased the yuan by over 4% between Tuesday and Thursday. These devaluations were reactive. They were responding to poor trade data that came out last Monday. It added weight to suggestions that China’s economy was slowing.
The effects of this sent the Aussie dollar lower throughout the week. No commodity currency was left untouched by the devaluations either. At least, that was until Friday last week.
The decision from Chinese policymakers to reverse the yuan’s devaluation stemmed the Aussie’s slide. A 0.05% appreciation of the yuan came as a relief to all commodity currencies.
