Dollar Drifts, Aussie Resilient Despite China’s Property Woes

27 September 2021 | Updated: 27 September 2021

After both the Aussie and the Kiwi in the dollar pairings plunged 0.80 percent on Friday as risk-proxy indicators, rising commodity prices, fading Evergrande worries, and state reopening plans have brought the AUD/USD 0.35 percent higher to 0.7285 today.

At the end of the prior week, the currency markets in New York dragged to a conclusion, with a jump in US rates erasing the US dollar’s early losses and sending the majors to a nearly flat close. In directionless Asian trading, the dollar index increased 0.21 percent to 92.28, before dropping slightly to 92.24. The index is currently trading in a range of 92.00 to 92.50.

As a result, both Antipodeans are exposed to more selling pressure if news from China continues to deteriorate. As a result, both are likely to be sell-on rallies for the first few days of this week, especially if China’s PMI data on Thursday is quite negative.

Given global concerns over China’s property industry and the US Federal Reserve’s decision to raise interest rates yet again, the Australian dollar did well to retain its ground last week. In the coming week, the A$ will continue to be focused on China, while Australia’s domestic data schedule will include retail sales and housing.

Aussie Regains Ground, Risk-On Mood Weakens USD

Given that the Aussie is frequently used as a proxy for concerns about China’s economy, the AUD/USD fell to 0.7220, its lowest level since August 24. Even when news broke that Evergrande had missed bond interest payments, 0.7200 remained firm. There was a minimal official statement from Chinese officials, but it quickly became clear that, while investors – notably international investors – would lose money, China’s economy and world markets would not be jeopardized. The stock market has recovered.

With data from US futures markets showing big net short positions as of September 21, around the time concern over China real estate was at its peak, investors may have already priced lots of bad news into the Aussie.

The focus subsequently shifted to the FOMC, the policy-making body of the Federal Reserve. “A slowdown in the pace of asset purchases may soon be warranted,” the committee stated, assuming progress toward its goals of maximum employment and price stability continued. This was pretty much what we expected — no specific timeframe for tapering bond purchases, but “soon.”

  • Broker
  • Benefits
  • Min Deposit
  • Score
  • Visit Broker
  • Fund Moneta Markets account with a minimum of $250
  • Opt in using the form to claim your 50% deposit bonus
$250 Min Deposit
9
  • 20% welcome bonus of upto $10,000
  • Minimum deposit $100
  • Verify your account before the bonus is credited
$100 Min Deposit
9
  • The Lowest Trading Costs
  • 50% Welcome Bonus
  • Award-winning 24 Hour Support
$200 Min Deposit
9
  • Award-winning Cryptocurrency trading platform
  • 14 Cryptoassets available to invest in
  • FCA & Cysec regulated
$200 Min Deposit
9.8

Highly volatile unregulated investment products. No EU investor protection.

  • Over 100 different financial products
  • Invest from as little as $10
  • Same-day withdrawal is possible
$100 Min Deposit
9.8
  • Trade top Cryptos such as Bitcoin, Litecoin and Ethereum plus more
  • Zero commissions and no bank fees on transactions
  • Around the clock service with support in 14 languages
$100 Min Deposit
8.5
  • Award-winning Cryptocurrency trading platform
  • $100 minimum deposit,
  • FCA & Cysec regulated
$100 Min Deposit
9.8
Share with other traders!

Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.