- The Australian dollar drifted lower to start the new trading week.
- Chinese stocks and yuan both fell during the session, likely contributing to the weakness in the Aussie.
- There’s very little on the economic data calendar on Tuesday, pointing to the likelihood of another quiet session in the absence of unexpected news.
The Australian dollar eased lower to start the new trading week, failing to benefit from renewed strength in iron and crude oil prices on Monday.
Here’s the scoreboard at 7am in Sydney on Tuesday.
Fitting with the broader theme of the session, very little movement was recorded, reflecting the impact of a slow economic calendar and holidays in some key markets, including Australia.
The AUD/USD eased lower throughout Asian trade, likely impacted by weakness in both Chinese stocks and the offshore Chinese yuan.
The weakness followed the release of a briefing from the China’s Politburo late last week that confirmed the economy had performed better than expected in the first three months of the year.
“The briefing said that the economy is off to a good start and is better than expectations,” said economists at Nomura.
“[It] has turned more bullish on the economy and less dovish on monetary easing. It has called for more focus on improving efficiency of fiscal stimulus and pushing forward structural reforms.
“Markets could interpret this Politburo briefing as the end of Beijing’s monetary easing and may turn significantly bearish on asset prices.”
Whether a factor behind the weakness in the Aussie or not, the AUD/USD held onto its earlier losses throughout European and North American trade with traders paying scant regard to sharp gains in crude oil and iron ore prices seen during the session.
Pointing to the likelihood of another quiet session for currency markets, there is very little on the economic calendar on Tuesday.
House prices, new home sales and the Richmond Fed manufacturing index from the United States are the headline acts, reinforcing just how quiet the session is likely to be in the absence of unexpected news or headlines.
Given the quiet data calendar, the movements in Chinese markets are likely to yet again be influential on the Australian dollar during the session.
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