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Australian Dollar Fell 100 points to 0.8660 on Emerging Markets Crises

Posted by Chris Advincula on Jan 24, 2014 7:11:00 AM

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Chart: WorldWideMarkets Alpha Trader

The Australian Dollar weakened and fell 100 points to 0.8660 from 0.8760 against the dollar in Europe from a number of bearish factors. Comments from the RBA Heather Ridout, the continued weakness of China’s manufacturing sector and the possibility of mining loan defaults. And a significant decline and developing concerns of contagion crises of the emerging markets that pose a threat to the financial stability of the global markets.

Reserve Bank of Australia board member Heather Ridout was reported saying the Australian Dollar had not fallen enough and suggested the rate of 0.8000 would be a “fair deal” for the economy. It drove Aussie to the 3 ½ year low to 0.8660.

The China Banking Regulatory Commission ordered its regional offices to increase scrutiny on credit risk related matters in the coal mining industry, raising market concerns of a possible loan default distributed by the Industrial & Commercial Bank of China, Ltd.

Market concerns of the economic slowdown in China and the negative effects of the worst sell off in the emerging markets in five years created demand for safe-haven currencies like the yen and swiss francs. Dollar-Yen fell 155 points to 102.00 from 103.55 while Dollar-Swiss fell 75 points to 0.8910 from 0.8985.

In the aftermath of the recent weak Chinese manufacturing data, many emerging markets such as Turkey, South Africa, Brazil, Venezuela, Argentina, Mexico and Russia reliant on exporting products to China, have all suffered the negative effects of the developing contagion fears. 

Nikkei down 304.33 points (1.94%) to 15,391.56. Hang Seng down 283.84 points (-1.25%) to 22,450.06.Euro Stoxx -1.57% to 3,068.17, FTSE -1.01% to 6,704.61 Dax -1.20% to 9,515.34 as of 12:00pm GMT.

 

Chris Advincula

WorldWideMarkets

 

Charts: WorldWideMarkets Alpha Trader

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