The Australian dollar is slightly weaker today after positive data out of the US and the threat of another currency devaluation from the Chinese government pressured the currency..
After hitting a low of US73.22c at 6.00pm (GMT) the Aussie dollar recovered slightly to trade at US73.59c.
Retail sales in America jumped 0.6% against a consensus of 0.5% and well up on last month’s figure of -0.3% adding more speculation to an interest rate hike from the US Federal Reserve in September.
Adding to the Australian dollar’s woes was the possibility of another devaluation of the Yuan from the Chinese government, although they mentioned that they have no plans to do so in the nearest future.
"There's no basis for the depreciation to persist," PBOC assistant governor Zhang Xiaohui said at the rare briefing on the currency in Beijing.
“The adjustment spurred by Tuesday's change to how the PBOC determines the yuan's daily reference rate was basically already completed” she said.
Some in the market are not taking the announcement seriously and believe the Chinese government will wait and see if exports pick up due to the lower currency and will leave the door open to another devaluation in order to breathe some life into the Chinese economy.
This won’t sit well with the Australian dollar and further losses are inevitable as a result of this move.
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