The Australian dollar has remained resilient today, brushing off the slump in commodity prices, but a G20 meeting to be held in China on September 4-5 could be too hot for the currency to handle.
At 8.34pm (GMT) the Aussie dollar was trading at US76.15c slightly up from US76.12c in yesterday’s trading.
Iron ore, Australia’s biggest commodity may take a hit after the G20 meeting if as predicted, the Chinese government cracks down on pollution which may put the construction industry on hold,
“Common practice ahead of international events, China’s local governments will impose a number of restrictions on several industries to help improve air quality in the region including the suspension of most construction activities, restrictions on ore sintering, cement, petrochemical and coke production,” Morgan Stanley said in a research note.
They also mentioned that this time of year is generally quiet for the construction industry and along with the G20 meeting, may pressure commodity prices like Iron ore which in turn would drag down the Australian dollar,
“Given that China’s construction activity eases over September-October, this event may act as a catalyst for a sell-off,” Morgan Stanley concluded.
All eyes are now on tomorrow’s speech in Jackson Hole, Wyoming from US Federal Reserve President Janet Yellen where investors will be looking for signs that an interest rate hike is forthcoming which in turn may put pressure on the Aussie dollar.
Risk warning: Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, your level of experience and preparation of taking risk. The possibility exists that you could sustain a loss of some or of all of your initial investments and therefore you should not risk more than you are prepared to lose. Please seek independent financial advice if necessary.
|By clicking "Continue" you will be redirected to the website operated by FIBO Group, LTD company registered in BVI and regulated by FSC. Click "Cancel" to remain on this page.|