China concerns push AUD sub 0 9000

Ratings agency Standard and Poor have again expressed concern at the rising level of debt seen in China, adding that the financial sector is the biggest risk to the China growth picture, if not the global economy. Meanwhile, the Chinese Commerce Ministry has signalled that the pace of export growth cannot be maintained and there are signs that the domestic economy is struggling.

The CNH is unsurprisingly under pressure as spot trades back towards 6.17 and one month volatility trades considerably higher at 3.6% from 2.15% yesterday.

The concerns about the Chinese economy have weighed on the AUD overnight as the RBA minutes from the September meeting revealed concerns on house prices: “housing prices were continuing to increase in the larger cities and members considered that the risks associated with this trend warranted ongoing close observation”.

The lifestyle was pushed back below 0.9000 as RBA member, Kent, added the AUD had remained surprisingly high given the decline in commodity prices.

USD/JPY briefly traded back below 107.00 overnight as US 10-year yields extended declines seen yesterday but the dip was brief as the BoJ’s Kuroda was quoted by the media as suggesting that the BoJ will make adjustments to policy without hesitation if needed; adding that he feels the drop in domestic demand following the tax hikes is somewhat diminishing.

Sterling will take a break from the Scottish Referendum polls today as we focus on the inflation data released this morning and we get the latest ZEW survey from the faltering German economy. Plus, PPI data due for release from across the pond this afternoon.

EUR/USD

Supports 1.2900-1.2855-1.2820  | Resistance 1.2985-1.3000-1.3040

USD/JPY

Supports 106.55-106.10-105.80  | Resistance 107.60-107.95-108.30

GBP/USD

Supports 1.6165-1.6140-1.6060  | Resistance 1.6285-1.6345-1.6400