By TraderVox.com
Tradervox (Dublin) – The Aussie and the Kiwi fell after manufacturing data from China declined unexpectedly. China is New Zealand’s second largest export market and it is Australia’s largest trading partner; as such, decline in the manufacturing data led to panic among investors who went for safe haven currencies such as the dollar and the yen. According to JP Morgan’s G7 Volatility Index, there is implied volatility as the index rose to 10.27 percent after it had fallen to 9.91 percent on March 20 which is the lowest level since February 27.
The Australian dollar slid against most of the major currencies as the market increased its expectation for a change in interest rate by the Reserve bank of Australia. The Kiwi dropped after China PMI slowed and report showing that the gross domestic product increased by half what economists were expecting. Cullum Henderson, who heads Currency Research at Standard Chartered Plc, commented that the momentum in China’s growth is slowing lowering the demand for the Aussie and kiwi.
The Australian dollar declined by 0.9 percent against the dollar to settle at $1.0368 during the New York trading session, but it had earlier touched $1.0336, which is the weakest it has been since January 17. Against the yen, the Aussie dropped by 1.8 percent to sell at 85.69 yen. The New Zealand dollar had its own share of the losses declining by 0.6 percent against the US dollar to trade at 80.84 US cents. It had earlier touched it weakest since January 25 of 80.59 US cents. The kiwi slid by 1.8 percent against the yen to trade at 66.80 yen.
Investors are now keeping a close eye on the efforts of the RBA to lower the interest rate, which is the highest among the developed countries. The declining expansion in the Chinese market is seen as the key factor that will lead to this change in interest rate. Analysts have suggested that the AUDUSD pair is poised for major downturn as China prepares for “a hard landing.” The 200-day SMA of $1.0404 is set to be broken as the Aussie-buck pair continues with the downward trend.
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