Market Overview by FiboGroup - 2015

The Australian dollar was crushed yesterday almost breaking down through the US70c mark, as worries over China emerged after another big fall in the Chinese stock market.

After reaching a low of US70.12c the Aussie dollar has somewhat recovered to be trading at US71.79c 5pm(GMT).

China’s stock market fell another 8% yesterday, bringing its recent losses to 40% which is well within the definition of a bear market and leaving terrified investors exiting emerging markets and commodity currencies like the Australian dollar.

The market was moving so fast yesterday the traders found it difficult to place a trade with spreads on some of the major currencies reaching 30 pips .

As the Aussie dollar approached the US70c mark traders began to buy the currency as the feeling was it had fallen to far and they felt that they could snap up a bargain.

"It got caught up in the stock market volatility, exacerbated by thin liquidity as participants stepped back to the sidelines." Noted Commonwealth Bank of Australia's chief currency strategist Richard Grace.

"This helped offset the negative risk sentiment around the dollar and it has bounced back from that," Mr Grace said.
The Australian dollar has risen sharply on the back of the latest interest rates decision where they chose to leave rates unchanged.

AT 5.23pm (GMT) the Aussie dollar was trading at US72.10c up from US71.64c in yesterdays close.

The local currency rallied hard following the decision by the RBA to keep rates on hold at 2% while governor Stevens refrained from talking down the Australian dollar and mentioned that the recent fall in the currency is helping the slump in the commodity prices.

“At its meeting today (on Tuesday), the board decided to leave the cash rate unchanged at 2%, “Overall, the economy is likely to be operating with a degree of spare capacity for some time yet, with domestic inflationary pressures contained.” Stevens said.

“The Australian dollar is adjusting to the significant declines in key commodity prices,” he added.

The Focus of the Aussie dollar will Thursday’s FOMC minutes from the US Federal reserve with investors looking for signs on the timing of an interest rate rise which may see the Aussie dollar give up some of its recent gains.