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AUD slipping on China concerns

Four markets in focus today: AUD/USD, Atlas Iron, USD/JPY and USD/INR.

AUD/USD

The pair is trading towards the lower end of the recent range and will be in focus ahead of the monetary policy meeting minutes. These minutes are unlikely to bring anything new and therefore China concerns could continue to dictate sentiment. AUD/USD is right on an uptrend support line, a break of which could signal further losses in the near term. I will be eyeing developments in China and iron ore prices closely today.

Atlas Iron

Interesting day ahead for iron ore stocks as iron ore has slipped below 100 to 98.50 for the first time since September 2012. No doubt some traders will now be talking about a drop to around 87 where it bottomed in September 2012. AGO is fast approaching 70 cents which is where is bottomed in June 2013. While it is tempting to pick the bottom, I would suggest waiting for a reversal before attempting to buy the stock. Traders who are short are likely to continue riding the trend until a reversal is seen.

USD/JPY

The pair has experienced quite a bit of volatility over the past 24 hours with investors remaining uncertain about how the week will play out. Yen gained strength yesterday as risk aversion accelerated on China concerns, resulting in USD/JPY trading to a low of 101.10 before stabilising and starting to recover through US trade. This was the lowest the pair has traded since early February. The pair has since recovered to the key 101.50 level where it is currently hanging around. Perhaps fresh comments from Russia suggesting it is pulling back troops from the Ukraine back to base have aided the safe haven unwind as gold is also coming off. Despite the recovery, I would still be inclined to sell USD/JPY on strength in the near term.

USD/INR

The Indian Rupee has been the star of the emerging markets space over the past few days and has stormed higher against the greenback. Recent election results have seen INR bid higher and USD/INR is now trading at its lowest since June 2013. This trend could continue in the near term as the election results continue to experience a euphoric reaction.

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