While global investors are fretting about the wild gyrations on Chinese markets, it doesn’t appear to perturb many in FX markets.
Indeed, if you were looking at performance of the Australian and new Zealand dollars today, often seen as proxies to goings on in China’s economy, you’d think things were completely the opposite.
Chalk and cheese, as they say.
The Australian dollar is soaring, adding 0.72% against the US dollar (.7322) and 1% against the Japanese yen (90.46).
Making the Aussie’s move look tame, the Kiwi is outperforming, and by some margin too. It’s jumped 1.03% against the US dollar and an amazing 1.23% against the yen.
As the 5-minute tick chart of the AUD/USD reveals below, having hit a session low shortly before China’s stock market opened, the pair has been bid even since.
This suggests the recovery in Chinese stocks, along with some modest short covering before the US Q2 GDP release and the Fed’s July FOMC policy meeting, are contributing the impressive recovery seen in Asia.