The recovery in the Aussie seen over the past few sessions was brought to a halt overnight, AUD/USD stalling above the 1.06 level. The minutes of the latest RBA meeting were one factor in eliciting a more cautious approach - the door was left open to further easing should the global environment deteriorate. Also in the background is the slower pace of growth expected in China, which is expected to impact the domestic economy, but the Aussie has remained surprisingly resilient to such fears. There can be no doubt however that the dynamics of FX markets have changed over the past few weeks and this has broken some of the established dynamics (such as between the Aussie and global stocks), so it's more the change in global risk dynamics (and appetite for higher yielders) that has softened the Aussie, rather than domestic factors exclusively.
Also in today's Daily Forex Brief:
- FX and bonds
- Sterling's big week
- Booming German house price
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